executive, a lot of different projects, and even way back when it started, got into this covering the entertainment business with the "wall street journal," and he has degrees in european intellectual history, which i need to talk to anybody at caa, so, michael, there is a former movie executive interviewed by pbs in 2001 who said the great line in the movie business and one you hear all the time is that the material is everything. the material is actually nothing, okay? material doesn't matter? show up with the greatest script on earth, prop it down, and they can have the greatest reasons not to be involved with it, and what drives the entire business is attachment, particularly in the 1990s. heavily driven by star power, and that former executive was you. >> and that is true.

[laughter] >> and that is true. the question is, do you see that change -- some version of that change happening in the journalistic world? >> i think so. really different zones here. i'm coming from print, you're coming out of broadcast, and we meet in the middle on the internet. these are radically, radically different equations, and i want to just back up and say there's a little bit of a false dichotomy here in that we're talking about innfotainment how it changes thing, and we point at tmz, and tmz, looking at it close, i go one beyond what you said saying it's one of the most intensely, class ky, reportorial organizations occur in this town. now, you have to look under the skin of the subject matter because that can distract you, and you can realize that -- g good plan.

>> you may or may not be interested in that, but within this small contained universe you guys do, i look close and fascinated at how you work the courts, law enforcement, do it right, all the thingses that back when we were better staffed on print publications we usedded to do, but print publications are broad. they cover an enormous range of things, stats come down, and we no longer have the intensity of focus where you guys are ganged up on a small area, and you record the hell out of it, and you do amazing things. putting that aside, to your question, i -- you say is that lack of importance of the material sort of taking control of journalism? >> yeah. >> yeah. look, what i see happening, let's just say internally op our paper, if i look and look particularly at the entertainment zone, i don't want

to stop and say whether the political coverage is good, bad, or indifferent because it's a different equation, really hard unless you study it and read it meticulously every day to make a judgment about it, but if i look at the way we handle entertainment for the "new york times," particularly on the web, there's now a vast amount of material posted and sometimes printed that just doesn't matter. i mean, it's absolutely vacant stuff, and it's like if you have driven through the south and looked at miles and miles and miles of weeds choking out the real stuff, we have miles and miles on that website and in that paper, and those of us who are still kind of just by habit, okay, old-timers, only way we know how to do it, trying to drill in, do a couple basic things like tell people something they don't already know, which is one of the rarest elements in a news story.

that's much of what's printed is a rejournallation of what's gone. you know, it's my version of what's known, my first person experience of what's known, my attitude of what's known, and getting that first impression is rarer and rarer and rarer inside the print stories, and tells people something that matters. i mean, we -- you can go up and down. we have web producers who evolved over the last four or five years into hired as people who used to post my stories, now they basically go out and they do a q&a, a soft q&a, with any celebrity who draws traffic on their own, hosts them on their own, and that pushes the story that might take us a week to crack the head of somebody who doesn't want you to tell it, and will post the story, i look, and it's seven stories down and pushed in because the celebrity

junk is basically crowding it out. it's taking time, taking space and energy. it's fundamentally, at least on the website, it's all traffic driven. you know, the more frequently you mention a celebrity name, the higher you're traffic will go, and if you want a lot of traffic, you've got to keep a constant flow, and it doesn't matter if other people have dope it or said it or whether it's a good story. you got to keep moving. >> yeah, please. >> i just -- i don't disagree with any of that. i will tell a little story that is in your world so you'll disown it as you should. [laughter] the single worst day i ever had on television, the actor, robert blake, is arrested, and he's arrested up in san fernando valley somewhere for popping his wife, and if that's about what the story is worth, what i just

gave you. the actor, robert blake, who has one very good performance in a tv series, a tv series, is arrestedded for killing his wife. we spent four hours on it. not like a figurative four hours, literal four hours. we were asking extra correspondents booked for no republican i -- reason i couldn't figure out. how do you think this impacts his career? he had no career. [laughter] there was an upside to being arrested for your wife's murder. >> if that upset you, imagine covering paris hillton getting arrested. >> i think i was gone by them. [laughter] four hours. okay, i get home at 2:30 in the morning, and my wife, who was a reporter, looked at me half asleep and says, why?

[laughter] okay, okay, i don't need this right now. you know, i don't need it. next day, i come to work, and there are 15,000 e-mails. average day we get 4,000 e-mails. there's 15,000. i look through a few hundred, not one said, you promised serious news. not one said you didn't do enough robert blake. not enough. >> nobody was complaining about it. >> not -- so irate about this thing about how we try, it's a mistake, shouldn't do this, blah, blah, blah, and my bosses going crazy, can't believe he's saying this crap, but in the end, you guys have to decide too. that program took the biggest number we had done since pan-am 587 crashed in queens two months after 9/11 thinking it was terrorism. ten years ago, celebrities drove

ratings. twenty years from now, celebrities drive ratings. whatever celebrities were a hundred years ago, they drove ratings on the wall, okay? i just don't think it's new. it's just -- >> it has got more painful. an easy way in newspaper and web terms to think about how bizarre this has become. think about the oscars. okay, like, ten to 12 years ago, we wrote about the oscars two times in the course of the year with nominations, and then it happens. that's about what that enterprise was worth. starting in about the year 2000, i believe, i was permly responsible for a terrible, terrible corruption, a step in this process. i was working at that time at the west coast editorial director, the bureau chief of inside.com, which we set up, earned $35 million in the first

dot-com bust, but it was a first early experiment in web news, like instan tape yows news, traffic delivery, all media coverage, and we paid everybody too much, left in tear, and went out. the only thing that made money on inside.com was something that i and a couple characters there invented call the oscar tracker, and we figured out as a lark that we would get a mathematical model and add up factors from color of hair to prior nominations, create a model to feed information into, and every single day for five months, rank all the con tenders. my boss said take it down to a decimal place. that'll really fascinate people. for five months straight, we posted a ranking, a horse race, who gets ahead?

777.2 is ahead of so and so. we instantly sold the entire page for the run to the lexus auto company, every day for 120 days, i had to write a handicap that went with this. [laughter] the entire year, i was doing as many as three appearances a day op your cable news shows. you know, up there called in because there's something happening, they quantified this and everything else, and as you go forward -- >> i knew i knew you from somewhere. [laughter] >> five damn months of the year now because there's ads and traffic around it. >> so my question would be, they found something that worked. >> right. >> why didn't they apply that to the rest of the operations? they found the working formula because what you say a lot of what we do, i mean, i guess the scary part is when you feel like you've become a slave to search engine optimization. >> what's crowded out?

at the "new york times" where you -- >> how does any story that takes real investment, i mean, look, when you read the paper every day, there's lots and lots of intelligent sounding stories in that paper, okay? they are still intelligent. if you know them from the inside and you've done them for 20 and 30 and 35 years, you do know that there's a quality to many, many of the stories, done in a day what used to take a week, okay? i mean, there's a classic example is -- i'm not a story every story is great, but it has to be valid, do something, and back in the mid-1980s when nobody in this town -- everybody in hollywood talked about what a monster he was, running entertainment business out of caa, and is corrupt, evil,

crooked, whatever, and there was never one single newspaper story about him, none. he prided himself op doing this in the dark. i'm sitting on the "wall streett journal" citying, well, screw that, we'll get him on the front page of the "wall street journal, and i peeled off and took two months dogging that man everywhere. i mean, when he came down the stairs at the carlisle hotel in new york, i sat in the jockey club with david brown talking about him as he walked down, interviewing about him. up to two months, solid, just nothing but piecing together who the hell is this guy that nobody heard of, and, ultimately, we ran it on the front page of the journal, triggered reversal in his behavior, couldn't hide anymore, went public, and many, many stories, vanity fair, everybody came after that. if i took two weeks on that story today, i'd be fired. >> well, right, by the same

token, aren't there ways to exploit it? i mean, my own experience, arnold schwarzenegger was a gift from god. [laughter] i mean, people read our stories. i got stories into the l.a. times about really hard topics. workers' compensation, local government finance, and taxes for dressing them up about stories about schwarzenegger, you know? he was sort of the way into that. you guys at tmz -- >> a perpalty. >> yeah. >> it was with schwarzenegger because he was already a movie star. >> right. >> not all of them, but a lot of people in congress, in the senate, they are very interesting people, and if you can goat to that, peel back layers, you find something

interesting. they are not movie stars, certainly, but, you know, i don't know, seeing a representative playing basketball and finding out that you've got a great jump shot and he does this every tuesday night might be interesting for people. >> are you doing issues at tmz in disguise? do you have an agenda? >> no. like i said, we're not going to go deeper there -- sometimes we talk about someone's politics, but more, like i said, trying to make these people, this politician be personalities. learn from it, might be interested in them, and maybe next time you hear on cnn or on fox news channel, you hear someone say, oh, marco rubio volted this. oh, wait, marco rubio, that's that guy on tmz live talked about how he was totally into

hip top and talked about for five minutes about why lil' wayne is not the new tupac. [laughter] we did that. we had a conversation with him, and i starred the end of the conversation, i felt bad we didn't delve deeper into the politics and what he's voting on. that was not the conversation. ultimately, it's more interesting. look, i really wanted to hammer him about reaching for water in the response to the state of the union. [laughter] but, you know, we had a fun conversation with this guy, and i thought, okay, maybe people will be interested now in what mar corubio's politics are. it's like we are opening it up, peeling it back, and now we hand it off to people who delve deeper into their politics, and i think those stimis a huge appetite for that or doing what we do, we create an appetite for people to learn about politics. right now, i think a lot of

people are turned off by politicians all together, and they don't want to hear anything about tell. why not try to make them more interesting and maybe people will pay attention to what they vote orlando johnson not vote -- or not voting on and screwing up in washington, d.c.. >> media has consequences. people are informed and misinformed. from the "obama -- "baltimore sun," and i covered chemical belts, plants blew up, and i asked why it kept happening. he said the problem is what's killing us is not what we don't know, but what we know. the american public knows a lot of things that are so, like how the government works, how politics work, and they actually don't. >> right. >> you know? gets to the question of sort of obligation, i mean, are we crowding out stuff that would

batter inform them? are we, you know, should we be using their obsession with celebrity to better inform them? >> in a strange way, i think that, actually, that's the upside of everything you talk about. look, maybe a lot of people have it wrong, but i'm a great, great -- i'm not a great believer in the church of journalism, okay? i've known too many journalists, too many people behave in too many bad ways, and in a very primitive interpretation, i think it was john stewart who many, many years ago said the only hope since all is so bad and corrupt, is to have maximum freedom and maximum outlets and maybe if we are lucky on a sunny day, the truth will kind of take shape among all of it. i think this multiplicity of economics, as much as it chews us up, the more we've got, the

greater the hope that ultimately you'll be able to feel what's real. >> just a little point here. i absolutely -- a great believer in democracy. >> yeah. >> if you have readers, they figure out what to know and make ju.s appropriate to their lives. we have to put it out there. we need to put it out there correctly. that comes back to charles. in the last couple weeks, two amazing stories. a story that sarah palin signed a deal with al jazeera in the washington post, and there was a story today that paul krugman filed for bankruptcy, the topic of conservative talk radio all day. both of those stories were put out by a satire website, neither story checked, and they both made it out there, so maybe

rather than worrying about the big stuff, we ought to worry about the small stuff, that he seems to be worried about every day, which is check is out. you know, before you run it -- part of the problem with the web, i think, is not that it's killing us or you, i'm living fat and happy off the state of arizona, okay? [laughter] and cable tv revenue from another time. [laughter] it's that it makes it -- it's like an e-mail. you know, you say things in an e-mail you never would have written in a letter, and you can say things on the web that you never would have written down. it's just too damn easy to push the button, and it's out there. you know what? i may not care about the guy with the abs, but i care a lot about teaching students just the journalism they do, check it out, learn to be a reporter. if you learn to be a reporter, you can report on celebrities, politics, report on sports.

you can report on the economy, but if you don't know how to be a reporter, you -- all you can be is a celebrity. that's all you can do. you've got nothing. >> that's what scares me the most is the huge vacuum like the stuff that we don't know that nobody is touching, the illusion that everything can be known by getting on line and tickling something with your thumb leaves this gigantic vacuum around actual information never up covered. i have a simple illustration of this last year, santa monica, the branch court, which as you know doesn't get online the way other things do. there was a stunning case in which about 20 young jewish professionals filed a lawsuit for appty semitism against the shank grew la hotel which out of they were thrown by the owner on a sunday afternoon who they alleged was afraid -- she was

pakistani, that her pakistani family would pull funding if they found out there were 20 jews raising money in a pool party, authorized by the hotel staff, for the idf, okay? she came in, threw them out. they said, what the hell, thought about it, and filed a suit. it's sitting in the santa mop cay court, and one quick round on the complaint is occupant on the internet. i think, well, you know, i wonder who is right and wrong? what really happened in here? what did she really say? which is crazy? which did it? what are the young professionals like? is there a chip on their shoulder or for real? i live in santa moan p cay. it's not my beat. my wife said, get the hell down to the courthouse. i want to know of the did this happen in santa monica? yes, honey, believe me, i'll do it. uninvited i dropped in, sat in the courthouse in what turned out to be a three week trial,

dodged duties, ran in there to listen to testimony, and it was awesome. it was amazing, and they -- the jury found against the owner, and with good reason after she testified. there was not one reporter of any level in that try. there was no local reporter. there was no ap reporter. there was nothing. if my wife http://chased me into that, and i filed to the executive editor of our paper because i had to go over heads, and do you know these people are just like your daughter, maybe we really ought to think about running it. oh, that's right, we'll run it. we stuffed it in the paper. how many times a day does that happen here that we don't know about it anymore? well, -- >> let me, we talked about the blurring of lines, and no one seems too unhappy about it. you know, to me, i look at it, i can't tell, i'm allegedly a professional journalist, and i can't tell the actors run the government, the governors are -- the newscasters, the person

sitting in the anchor chair, and it's all mixed up. political scientists argue we're returning to the 19th century, a time when the public was most engauged, at least a limited public, you know, less than half the adults could vote, but those who were voted in huge numbers. >> gather around the rad owe. >> parades, and run for president, the glorious times of political engaugement, and now we're a sin kl environment. the blurring lines have consequences for things like ethics? there's some, you know, media organizations that pay their sources, pay for tips. tmz is one. should we really about that? worry about confusion? about who is who? >> two things. first of all, we don't pay sources. we don't pay for information. we pay for photos.

we pay for video. absolutely. now, as far as -- >> no, no, i have a little something -- [laughter] >> go ahead. [laughter] >> i don't need a rubio. [laughter] clarification made. >> right. >> second, why do you care? what difference does it make who is running for office? who -- what difference does it make? i guess, like, it seems like you want us to be upset about this blurring of the lines. look, i don't know what caused it and why there's a fascination with celebrities. you can't deny it's a reality. you can sit and wine about it. you can complain that, you know, it's harder to cover a story

now, but -- or you can just deal with the reality of it. i mean, this is the way it is now, and i don't have any issue with having politicians be -- or entertainers become politicians. i don't think that's the problem with ethics. the problem of ethics issue i think the internet is part because everyone does -- you know -- you don't have -- your deadline is two minutes ago. you don't have that thing where you wait until what -- whenever the printing presses start running or waiting in the newscast is on at five o'clock. like, you have to do it now. that can cause a problem with ethics if people just decide they are going to play loosey goosy with the facts and get it out because they want something out there. if you do that, then, yes, there's a problem with ethics, and it's -- i tell the interns, well, what's important here? well, what's important is speed. that's what's really important,

but what's more important is accuracy, and, yes, we need to have this now, now, now, now, but he doesn't mean now, but i want the actual story, and i want it now. you have to push for it. before you hit the button to publish, make sure what you are publishing is correct. the day we published the michael jackson death was -- there's literally six people after the entire room worked on the story standing around the butt top, -- button, and do we have this, and this? are we sure? i'm going to hit the button. he hit the button. that was a story that was so big you got to triple, quadruple whatever, quintuple check that this is correct, and then you hit the button. if you just ran off, print

something, hit the button before you know, you're going to get screwed. >> i just -- i -- you know, i'm not opposed to being contrary. [laughter] for what i'm paid tonight, i'll be contrary. [laughter] i remember jackie oh was dying, and i brought it to the editors, and we did what they did with it, and then i made it better again, and everyone was really excitedded. i said, you know, we should find out if she's dead. [laughter] because that's pretty much the base line. [laughter] a great story, but will be embarrassing. >> yeah, yeah, and i would rather, like barbara read it if she's not dead than have my voice on it.

[laughter] honestly, it's no different. it is -- >> yeah. >> and so are the pressures, the pressures different? i imagine they are. i mean, hoppestly, i don't deal with it every day. are the economic pressures different? absolutely. no question about it. profusely so, but the basic truths of journalism is if you don't get it right, you don't last long in this. i don't think it changed much. >> the area where the lines have blurred that i find personally very troubling now, but it only, in a way that makes it incumbent on all of you and us to think more clearly than we often do, an that's an awful lot of the political and historical information we get now is coming through movies, and i'm aware of this because i cover movies, an i watch what's happened in the

last two and three and four year, and what's occurred is movies at the lower end, documentaries, and a fair number of dramatic films, as long as they're not the big effects driven block busters now move very quickly. you know, classically took two years to get a movie up and running, just the physical act of it. now, you know, movies like social network and "zero dark thirty" come across almost in realtime, and documentaries come across in realtime they are occurring. we got whole cycles of film that purport to tell us political stories and create political realities, and i think there's something -- something very beguiling, particularly about documentaries, "fahrenheit 9/11" hit me like a ton of bricks. you watch the movie and creates the illusion everything you are

told has to be true. i see it. .. i would like to see the first 60 minutes tell it as anti-george bush documentary. and like to see it reedited with all the same shots and

same material and everything just pick it up and make a pro-bush documentary out of the same material. you could do that. and that is the one place that i find a little scary. >> two things. on point one ultimately. i think most of the documentaries are preaching to the choir. >> yeah. >> and so whatever harm there is, and i agree there probably is some harm in kind of journalistic sense, is confined to people who really suffer from the primary information disease of our time which is simply wanting to hear things you already believe are true. >> that's true. >> okay. that's number one. just on the subject of historical things i live in phoenix, so i go to movies really early in the day because it is what you do when you're old and in phoenix. [laughter] >> and air-conditioning. >> so we're walking out of "lincoln" and this is how it ties in.

elderly couple, meaning they're two or three years older than i am. behind me and the guy, the husband, presumably the husband says, i thought that was great. and wife says, yeah that was good. the husband said, i can't get over how much he sound like "lincoln". [laughter] i go through life trying not to be noticed. i'm wondering and i turned around and, like my wife is grabbing me come on. so maybe these things are happening too damn fast. you know. >> here is one case maybe the lines are blurring and maybe it is an issue, the fascination with celebrity. we were discussing this today. does it bother you that the first family seems to be attaching itself, and this started way before then but

attaching themselves very publicly to celebrities? like is that an issue? does that bother you that maybe they are, you know, getting too close to them? why are they getting close to them? is it just for money for funding or because they want to be seen, they want some of the shine that they get from hanging out with jay-z? >> maybe celebrity wants to hang out with the president. maybe the shine is the other way around. >> at the oscars sitting there and the single, every single off the record, what the hell was that, complaint about the oscars show mentioned being very upset that michelle obama showed up and conferred the best picture oscar. not one person that talked to that morning said they liked that. hollywood rebelled deeply against it. i'm not even sure i quite know why. >> this is a great conversation but we want to bring the audience into it.

>> turn it over to all of you for questions. i know there are going to be dozens of them. we only have a limited amount of time. i want to remind you all four will be upstairs at our reception. jennifer and i are taking questions. she is on the other side. please come to us. we'll pick you out. remember to say your first and last name before your question. this is being recorded both to be put up on our website by tomorrow morning. you can share it with your friend that couldn't be here tonight and we have c-span here tonight. it will be recorded on c-span and air probably next month. stay tuned for that. jennifer has got the first question. first question on your left. >> hi, my name is egal. aarons. i always have to spell it. i was troubled by the fact, i was troubled by the fact that one topic i thought really wasn't discussed very much here, we live in a democracy. people vote and, in a sense are responsible for the decisions that are then name

by our government that have an effect on our lives and people around the world and when, when entertainment starts crowding out real information that people presumably need to make these decisions, i think it's a problem. so, you know, if anyone is going to vote for or against marco rubio because of what he thinks about, you know, some rap star and other, we're in real trouble. i think so. so, is that not something that bothers you? i mean there is some kind of responsibility journalists have to toward society. >> i agree it would be a huge issue if someone voted for marco rubio because they too liked it. upac. no, that is not the right reason to vote for marco rubio but maybe you listen to what marco rubio says and then make an informed decision. listen to what he says about issues and you make an informed decision. you actually, he is on your

radar because you heard that. because that is something that appeals to you. you're right, i think that all that information is still out there. i guess the problem is, it is harder to find and it is not as, it used to be you could turn on the news at 5:00 or 6:00 and you would get that information. and now you're not getting it there. it is a still out there. you just got to search for i will a little bit. >> can i comment on your slightly different take on this. you will be offended by this in a gentle way. [laughter] if you go back in your lifetime, or my lifetime you will find that the more likable candidate wins the presidency almost every time. now there are ties. i mean honestly, you know, johnson and goldwater, neither exactly want to happening with. >> want to get even more shallow. >> you have to think

goldwater back he was less likable than lyndon johnson. you can say what you want about george w. bush, but the guy was way more likable than al gore in my opinion. the more likable guy wins. it tells us something about them. particularly in a president. we want the guy that comes, or the woman that comes into our living room every day to be likable. and so while i don't think that's, you know, guy's musical taste is reason to vote for him, i think, no one, knowing who the person is tells us a lot about all of those things we can't anticipate happening but do happen when someone is elected president and they have to respond to and that may be more important than knowing how they feel about the deficit for all i know. >> the camera always lies. i don't believe for one second that -- >> you're a cynic for god's sake. >> i don't believe for one

second, joe mcginnis, selling of a president, that is landmark book. talking about television era and been 40 years we've been dealing with this phenomenon. you have the nixon-kennedy debate. we are trusting image and we -- >> kennedy, there are truths here. kennedy actually was more likable than nixon. even mrs. nixon liked kennedy more. [laughter] >> now wait a minute. wait a minute. >> you can be even more shallow that the better looking candidate always wins. >> behavior and many things that occurred he may not have been more likable. >> he may not have been but he was. >> let's get a question. >> question on the right. >> david bloom. a former long-time print reporter who handles social media for online only news site, i'm curious you talk about speed driving the decision-making process giving you less time to do long-term reporting. the other thing you really didn't get into is the impacts of our big data.

understanding of the stories people actually want to watch. in fact part of what is driving the infotainment interest, in fact that is what the audiences are really showing in a very hard-to-refute way, what they want to follow. almost like big data and understanding the hard numbers of social media, and seo are changing journalism more than the subject themselves. they're going where the money is. it is the willie sutton approach to journalism? >> true. look, that happened first before the internet to magazines. if you look at the magazine rack, generally interest magazines that told you about something outside of yourself shrank and died one by one by one. used to be magnificent magazines. new west. california. stories that you could hardly dream were occurring out there. wind forward 20 years and

every magazine was demographically driven. magazines have been put into a place where they were fundamentally a mirror reflecting the desired readership. so from cosmopolitan on down it became a niche market where every magazine was, i would call it intellectual wallpaper but they're not really intellectual, or wallpaper for the people who already feel that way. it's a mirror held up to them. well that's what's happening in the internet. it is impossible to refute the pressure of traffic and the numbers. you know, you will always do better giving people what they want but that's necessarily going to create value. sometimes the single true fact is something that nobody wants but it's still a single true fact and it is important. >> i, to me, what this stuff has done is made the data

more precise but the data was the data before. i knew at 4:15 every day whether anna nicole smith, whether we spent enough time on anna nicole smith or we did not. it was really clear, you know? executives would call, say, whoa, what happened at 10:15? i want to, we covered the war. [laughing] i don't know what got into us but that's -- >> have you watched newsroom or been too painful? >> it has been funny to me because, there's a lot of me there. there is a lot of me in the character. i literally talked to aaron and there is a lot of me. like most people who watch, lawyers, when they watch lawyers shows, doctors, first of all, no one is having that much sex [laughing]

and it is never really that good. but, so, i think, like a lot things about the internet it has increased speed but speed was always an issue. microtargeting. the information is more precise but we, it is not that we didn't have a sense of it before because, i think we did and so while i understand the argument, i think like a lot of things it's just, it's just someone exaggerated, i don't mean that pejoratively, exaggerated sense of what always has been. we would see that princess diana just sold magazines but we would really know she sold magazines but we actually knew that before. >> that's a vast difference though in you come from television where that has been, everybody has known that. in tv you grew up with ratings and feedback and knowledge.

believe it or not, even unto this day, we still have editors who say, i don't care if one person doesn't care about this, it matters, go out and do it. >> where is that dude working? [laughter] >> i just had a story not that long ago, i thought it was a great story but it was a story about chinese censorship in american movies and it was very difficult to put together but it had to do with the fact that american movie studios are running their scripts through chinese censors because, uninvited, and the censors say, no, change this, change that, the other thing. they want the movie to play in china once it gets made. nobody asked for that story. one kid in the whole world, colorado state student asked me why the hell aren't you doing something about chinese censorship. i went out and spent a week and a half and did it. there was no demographic value to that. >> but it did end up in the paper? >> it did get there. >> another question. >> question on your left. >> hi. randy olson.

i want to push you on simple story question on what is at stake with this whole issue and you've been alluding to it. overall is this crisis or not? one end of the spectrum, cnn, same old thing and at earth end at "new york times" you feel more urgent about it. crime rate is down and life expectancy is up. doesn't seem like the society unraveling. simple question is this crisis or not infotainment thing? >> first of all, i don't want it sound defensive about this, which, is a pretty clue that i'm about to but i don't represent cnn and i don't want to and god knows they don't want me to either. [laughter] i'm pretty comfortable on sort of network television broadcasts, those things. so i don't want to be i don't want to be seen that way. i'm not comfortable and i don't think, you know, i was employee of theirs. i was an employee of abc they don't want me speaking for them either. is it a crisis?

i don't see it as a crisis, i don't. i think democracy, information, democracy is kind of messy sometimes. this is sort of messy, this can get messy. but it's always been thus in some way or another. and what, if, this will sound like a copout and maybe it is. i don't know. is what we need from you, is some diligence in what you do, that you have to look for stuff. it is there. the time, i mean, honestly, i mean you wouldn't know it from this conversation but "the times" is an amazing newspaper to me. reading "the times" every day whether the political stuff or story of a avalanche at the pass in washington state, i can't find that anywhere. but if you only, only look at the homepage, you don't get it in every sense you don't get it. and so we all, and, in the

kids we teach and, and we need to work harder, better, smarter, and, more efficiently. but so do you. but here's the question, need to refine it. is there good infotainment and bad infotainment? and what is the difference. >> that is his department. >> if it is about important things. if it actually gives me a sense what reality is, you know? >> that is completely subjective. i got to tell you, i can't put my finger on exactly why, i hate that word infotainment. i just hate it. when i got the invitation to be here and looked, infotainment. look it is either entertainment or what we found in research is that, you know, we, people don't, it is almost people don't like the word news. like it has become a bad word and people don't seek out news. they're getting news but they don't like to call it news. they want to be entertained

and sort of what aaron was saying about, maybe people watch msnbc or fox news channel because they're entertained while they're getting their news. they don't want just news. and that's why, and so, i don't know what it is about the word infotainment but i'm getting off the subject. i don't think it's a crisis and i don't think you can say whether there is bad infotainment or good infotainment. it is a democracy. if you want to read about paris hilton or lindsay lohan latest and want to go to "tmz", that's great. if you don't want to, that is you have the right to read "the new york times" every day. >> almost exactly the same thing but difficultly. i think you're right. it is not a crisis for it to be a crisis you have to believe that things were wonderful before and wonderful has died now and what has happened and i think you would have to be an idiot to think that's true. it is just not. but it is a time of enormous

chaos, you know what i mean? like periods in chinese history, we now have a thousand years of chaos and others which there are years -- we're in a period of chaos and change and i think it is just incumbent on everybody to do a whole lot more thinking about what they're reading, what they're seeing, what it means, they're getting it than it used to be. can you imagine, i don't think ten or 15 years ago you would have had get-togethers like this and they occur all the time now because everybody is sharing in that process of trying to figure out what is happening here? what is this all about? i think that's a good thing. >> one more question. >> time for one last question. again i want to remind you, please join us upstairs in the lobby for wine, beer, soft drinks, whatever you'd like. you're in great company and all of our guests will be there tonight. our last question. >> hi, matthew ross. i wanted to talk about this idea, i don't know if i'm making up this term, like a

piggyback journalism where you kind of talked about how some parity information has come out and it is turned into actual news. you said about palin. i know that the associated press has been doing this for years. people followed stories and been that way since the beginning of, you know, news but seems that piggyback journal system happening so frequently now. everybody is on the same, you know, whether it's entertainment or whether it's actually news that, a lot of misinformation is going out there because of this. one person gets it wrong. everybody gets it wrong. do you feel this is actually dangerous? >> that, i think, i don't know if i would used word dangerous but i think that does come from sort of what you were talking about there are sites that do nothing they're aggregators. all they're doing, they want to get a story up on their site they know people are searching for. if sarah palin is a hot topic and they know people, they will put that story up.

that is what i was referring to, that can be a huge problem for ethics if all you're doing, if you walk into work and running a site and your issue, your goal for the day is, i'm just going to get the biggest numbers i can get today. doesn't matter if it is true, doesn't matter if it is real. i will find stories i know people are itch soing for. it is easy to find that information. anybody can do the research and i will put up the stories, yeah, that is dangerous because i have had some times people walk up to me and say, hey, is it true about -- i think my sister one night called me and said. something about stevie wonder. it is a ridiculous story. no, it's not true! where did you hear that? i thought a few times on somebody's facebook. so i figured it had to be true that, you know, -- >> you can see the last few minutes of this on -- we're going live to the white house. press secretary jay carney

is briefing reporters. >> red sox wallopped the yankees on opening day, important to note, 8-2. second the nationals blanked the marlins 2-0 with two home runs by bryce harper on first two at-bats. excellent opening day. second announcement is monday travel, you probably have seen but i want to reiterate that on monday, april 8th, president obama will travel to the university of hartford where he will continue asking the american people to join him in calling on congress to pass common sense legislation to reduce gun violence. additional details on the president's event at the university of hartford will be forthcoming. with that i will take your questions. jim? >> thanks, jay. want to start with north korea. yesterday you said that the u.s. has seen no large-scale mobilizations or repositioning of forces in north korea. today pongyang said it will

restart its plutonium reactor and increase production of nuclear weapons material and i wondered does that give the president some pause? are you reconsidering the view this is a familiar pattern or simply belligerent rhetoric? >> i appreciate the question. the fact is that north korea's announcement it will reopen or restart its nuclear facilities is another indication of its pattern of contradicting its own commitments and its pattern of violating its international obligations. as you know, that facility has been dormant as part of an agreement which north korea at least with this announcement seems to be willing to violate. and there's a path open to north korea to achieve the security international respect and economic development that it seeks but this is surely not the path and as i said yesterday, it is our position and the

position of a broad international allyance if you will that north korea must abandon its pursuit of nuclear weapons and abide by all of its international commitments. we seek the complete verifiable and irreversible denuclearization through ought thenic, and credible negotiations. the u.s. and our international partners have the shared goal of ensuring the denuclearization of the korean peninsula and strong peace and stability in the southeast asia. we are working very closely with our allies in the region. we are taking appropriate measures in response to the bellicose rhetoric and provocative actions out of north korea but it is, but these actions and this rhetoric is in keeping with a pattern of behavior by the regime in pongyang. >> jay, ban ki-moon seemed a

little more alarmed saying the current crisis has gone too far. he said north korea, is quote, on a collision course with the international community and that international negotiations are urgently needed. does the president agree? >> the president has expressed his concern about the actions and behavior of the regime in north korea and we have worked with our allies most recognizeably at the united nations security council when a resolution was passed unanimously with china and russia condemning north korean behavior in this arena and we will continue to do that and the steps we take together with our partners put more pressure on north korea, further isolate north korea, make it clear to the regime there that there is no benefit to the north korean people, to the path that they are taking.

meanwhile we obviously take the steps necessary to insure the capacity to assist our allies and defend the united states. >> on the trip to hartford coming after the trip to -- tomorrow, is this a recognition by the president that he places some real obstacles in congress on gun, anti-gun legislation or gun violence legislation, even on the background checks that seem to have some movement before? >> the president has always said, we have always said that this would be hard. if, if that weren't the case it would have been done before. if it were simple to pass measures through the congress that are very common sense but would reduce gun violence in america, those measures would have passed already and the president has always recognized that this is something that would be a

challenge, but that in the wake of the horrific shootings at newtown, was an obligation of all of us to work on and to try to get done. we remain engaged in conversations with the senate and those senators who are interested in forging a bipartisan compromise on measures to reduce gun violence. i noted and the president has noted that when it comes to background checks the measure you mentioned, this is something that's supported by over 90% of the american people. when you ask an average american whether or not it makes sense to have, to require a background check, if you're going it purchase a weapon, you know, overwhelmingly 90% plus say it makes sense. most of them say, many of them say, they just assume

that system already exists. that is an important point to make here that the system does exist. the goal of those, like the president who are trying to improve the system is to close loopholes within it that make it imperfect. that allow those who should not obtain weapons to obtain them. this is something we're working on very closely with members about of both parties and that's why the president is going to denver. that's why the president is to hartford. that is why the vice president has held so many events and meetings and conversations and you can assume safely that lots of conversations take place between the administration and both staff and lawmakers on capitol hill on this issue and we'll continue to press forward. it is very important. it is essential to the memory of the victims of newtown, that all of these measures get a vote. that they are not filibustered,

and it is essential that action be taken as the president said so, passionately last week. >> jay, back on north korea, when you say working with our allies, what exactly does that mean? >> well we are in close contact, have been and continue to be with our allies in seoul and tokyo, to coordinate on this issue and we are regularly reaching out to beijing and moscow to encourage them to do more to restrain the north koreans. as i noted moments ago we have seen cooperation from all the members of the security council as well as obviously our allies in the region on this issue and that is very helpful when it comes to putting the necessary pressure on north korea. this is part of a the pattern of behavior that we've seen out of north korea. you know, it was, north korea acquired a nuclear weapon and tested it

under the previous administration and we have seen, consistent behavior that is, counterproductive to say the say the least to, goal one assumes north korea's leaders aspire to which is improvement of a lot of the north korean people and an end to the isolation of country within the international community. so we the president is being regularly updated on this and briefed on this. the entire national security team is obviously focused on this as you would expect but i think it's important to note that as i said yesterday there, you know, the rhetoric not been backed up by action and there is a pattern here, a pattern that is familiar. >> what are the chinese and russians that are not doing that they should be that would be more helpful? >> i think it is not a mystery to anyone that china

has, you know, influence on north korea or potentially has influence on north korea and we have in the past and we are now urging china to use that influence to try to affect north korean behavior. that is also true of our interactions with the russians. you know this is a broad diplomatic effort that includes considered nation with our allies in japan and the republican of korea as well as with china and russia and others. so we're going to keep up that effort. . .

>> meanwhile, during a period like this where we're seeing this kind of pattern of behavior reassert itself, we're consulting with our allies, taking necessary precautions, making clear to the north koreans what our views are, what the consensus view is of the international community, what steps they need to take to improve their situation within the world. and, you know, that process will continue. >> [inaudible] >> yeah. >> thank you. just a follow on to the question, does the president concede that the kind of bipartisan enthusiasm that existed after the sandy hook shootings is no longer there? >> well, i would point you to what the president said last thursday, and he took great issue with the suggestion or the

implication that a mere 100 days after that terrible event somehow the country or washington could move on. the families that suffered the loss in newtown will never fully be able to move on. and those of us across the country who were horrified and, as i think everyone in the country was, by what happened in newtown, you know, will never forget that day or the days after. and it's a reminder constantly of why we need to act. as the president said way back in the wake of newtown, if we can take some common sense measures that would save one life, one child's life, we ought to do it. and if we can do more than that through the proposals that he

has urged congress to act on and the initiatives that he has acted on and is acting on administratively, if we can reduce the amount of gun violence, if we can protect our children better, then we will have at least partly fulfilled our most fundamental obligation. and i think -- he believes that that passion, that urgency still exists around the country, and it still exists, you know, if not in full, then in part in washington. and that is why he is continuing to make the case and why he will make the case in denver and will make the case if connecticut, it is why we are engaged with congress on this very important matter. and i would just note that, you know, this process continues to move forward. negotiations and conversations continue to take place, and it is essential that congress act and essential that it take

action. >> would the president, though, be as aggressively pursuing this on the road and the vice president and others in the administration if the conversation up on the hill was in a better place? >> i think that sort of turns on its head the basic point which is the president in the wake of newtown made clear that the country needed to act and that he would act, immediately called on congress to take up measures that he supported in terms of legislation that would help reduce gun violation, common sense legislation that in no way infringes upon americans' second amendment rights. he then asked the vice president to lead an effort to assess what else we could do, what package of initiatives we could act on to address this problem, and that within a month was put forward to the american people, and we have been pressing ever since. so -- but i from the beginning, as everyone here knows, the

proposition itself was a challenging one. for all the reasons that we understand about, you know, the efforts in the past to address gun violence through common sense legislation or other means, you know, this is not easy stuff. and the president has been clear about that from the beginning. but there is, that is not an excuse not to do everything you can to make it happen. >> on another subject, former secretary of state clinton will be stepping out to make a public speech this evening, and i'm wondering is the president paying any attention to this at all, and does he continue to get any foreign policy advice from her? >> i have no private conversations to read out to you with secretary clinton or anyone else, but you know how the president feels about secretary clinton, about her remarkable service in this administration in his first term, and i'm sure, i think you're referring to the vital voices event, and i'm sure

he wishes her well tonight and going forward. >> [inaudible] >> yes. >> jay, does the president think he can change votes in this congress by going out to the country and making this appeal on guns? >> i don't think it's an issue of changing votes, it's a matter of what we've always said which is that these are, all of these issues that we are addressing here in washington have a direct impact on the lives of average americans. and they have a stake in the what we do here. and it has never been the president's belief that americans elect their represent thetives, send -- their representatives, send them to washington and then disengage from the process. in fact, it's been the president's belief that americans remain focused on and care deeply about what happens here and that they want to be brought into and engaged in the process. and that's why the president has taken the approach on this issue and so many other issues that he has. because he believes that the

voices of the american people are very important part of moving forward on these tough issues, whether it's, you know, budget orifice call issues or immigration reform or measures to reduce gun violence. so i think that it's important, it's an important part of the process that those of us who are here in washington working on these issues are constantly reminded of, you know, the americans out there in the country who care about what happens here and hold us accountable and hold, especially, their elected leaders accountable for what they do and how they vote and how they respond to national tragedies like the tragedy that occurred in newtown, connecticut. so, you know, that's part of a process that he's engaged in. it's not an either/or. as we've always said. as you know and we've been very transparent about. he is engaged very deeply in an effort on this issue and others to have constructive conversations with lawmakers of both parties. that process continues, and

that's reflected even when congress is out of town with ouren gaugement -- our engagement at the staff level with staffs of both parties on capitol hill on this issue and others. and that will continue. but at no point in this process does the president believe we should leave the american people out of it. he will corn instantly engage them and constantly make his views known and ask the american people to make their views known. because that's how stuff gets done, important stuff gets done. >> the president obviously said this in the state of the union, and you just said it again, you know, it's essential that there be a vote on these issues. what's the president demanded, a vote or get these things passed? >> well, he clearly -- every element of the package he put forward he supports 100%. it is a starting point to insist that they all get a vote, the legislative pieces of this. because it would be appalling, in husband view -- in his view,

if the memories of the victims of newtown and other places were forgotten through the process of filibustering a vote on measures that the american people expect whether they agree or disagree their elected officials in washington to vote on. that's all. i mean, these are all tough issues. we talked about it with every component of the legislative package. but at the very least we need votes on these. those who are elected and sent to washington need to cast a vote and say, you know, explain their position, say where they stand. you know, the president's out there making an impassioned case for these common sense measures. vice president's out there doing the same. a number of members of congress are doing the same. other leaders around the country are engaged in that. and we understand, and the president's made clear that he understands that these are, you know, that there are regional differences on some of these issues, and there are things that, you know, we need to

engage in and recognize and make part of the discussion. and the vice president's process did that. conversations the president's had with lawmakers, you know, who have, you know, who have an interest in taking common sense measures but who also have historically strong backing when it comes to their support for the second amendment. you know, the president understands all of this. and he understands it's all part of the process. but he insists that we act. yes. welcome to the front row. >> a couple of questions revolving around the brain initiative this morning. >> uh-huh. >> do you think that this brain initiative has any chance of moving forward if the president doesn't get his way with the budget? and if the budget deficit is running into trillions of dollars, how can the president justify proposing another 100 million on this? >> well, first of all, everything that the president's

proposing will be paid for as, and will be in keeping with the caps set by the budget control act. that's number one. number two, there has historically been, and there seems to be today, bipartisan interest in this kind of innovative research that can pay huge dividends down the road for our country economically, medically, when it comes to the health of our senior citizens who suffer from alzheimer's or others who suffer from parkinsons. the potential here is enormous, and the investment is relatively small compared to the potential. so the president expects that there will be, that the tradition of bipartisan support for this kind of initiative and innovation will prevail. one of the agencies he's tasked here with undertaking this initiative is darpa, and as you

all know in its previous incarnation, this was the agency that was seminal in the effort, you know, in creating the internet and launching so many, so much economic potential in this country and around the globe. so i think this is one of those investments, as the president has argued often, that are essential to make if we are going to continue to grow and maintain our lead internationally on the cutting edge of scientific discovery and economic and technological development. >> you don'tty it's a long shot given -- >> i don't. >> -- the climate? >> well, no. budgets are all about priorities. i will stipulate now that the president's budget will not be passed word for word into law. it has never happened, and it won't happen this time. but the president's budget will make clear what his priorities are, and many of those

priorities will reflect the kinds of things that have enjoyed bipartisan support in the past. and we believe enjoy bipartisan support now. and this kind of innovation and the research is key to our future economic development, it's also key to the health and welfare of the american people. eld. ed. >> about the budget. can you give us an update on the sequester? yesterday the customs and border protection agency said they're actually postponing furloughs and overtime cuts for border patrol agents. i thought in february when secretary napolitano came out here with you, she told us it was dire, these agents were going to be furloughed and can that we were going to be less safe because of that. >> well, i think both are true. what is a fact that when you're dealing with these kinds of across-the-board, forced budget cuts in the middle of a fiscal year and you're having to make all sorts of adjustments to account for them and to reduce

your expenditures accordingly, you know, it's a moving picture. and that can be on the plus side where furloughs may take place a little later or on the minus side where things may be more immediate. i mean, that's just a fact. that's true at every agency. but i -- look, feel free to convey to your readers and viewers that the sequester doesn't matter and then explain -- >> i didn't want say it didn't matter. i said the secretary came in here and said we were going to be less safe. people were going to be crossing the border because of less agents. and then they announced yesterday, actually, we're not doing that. i'm not saying it's not -- >> absolutely not. and i'm saying that this is -- i mean, you are editorializing enormously in that -- >> february 25th she said if you have 5,000 fewer border patrol hours or agents, you have 5,000

fewer border patrol agents. that's an impact. >> and how is that not the case? >> they announced yesterday they're not doing that. >> well, but there are reductions -- >> well, what are they? >> go ahead and report that, ed, we've made clear -- >> they said yesterday we're not doing that. >> talk to those who have been laid off at defense industries, talk to those who have been furloughed -- >> [inaudible] >> look, you can, obviously, go to dhs -- >> she said we're going to be less safe. >> right. and the impact of the sequester will not all be immediate. they will -- if you can predict to me had been the sequester will end, when republicans will make the fateful decision to fund border patrol agents or fund our national security interests or fund head start at appropriate levels rather than, you know, continue to extend tax breaks to the wealthy and well connected, tell me when that happens, and then we can assess what damage was done after the fact. there is no question that when you have these kinds of

across-the-board budget cuts, as many republicans warned, and as many republicans when they go home to their districts as we speak are complaining about, when they affect their districts, the impacts are real. and they affect real people. and i know there hasn't been a lot of coverage of the impacts on real people, on the families who had to be engaged in lotteries to see whether their child on a friday was still going to be in head start on monday. tell them it doesn't matter. tell them that the impacts aren't real. and i take your point. look, this is a moving picture. budgets are big things. you know, outflows and inflows, you know, that's why. you know, there are constant adjustments being made at each agency as they deal with their budget in terms of what the impacts of sequester are. but they are real, and they are progressive in the sense that they don't all happen at once, and, you know, when we make predictions about what will

happen in the future, it's going the change based on how the budget picture looks a month later. but they're real. >> the last thing on this. when you said "moving picture," the other thing the administration kept saying in february was there was no flexibility for these cabinet secretaries. republicans said they could move money around, you said, secretary duncan, others said you can't do that, there is no flexibility. now you're saying it's a moving picture, so the border patrol agents won't be moved today, i thought there was no flexibility? indiscriminate, across the boardsome. >> the law is written the way it is written, designed specifically not to allow the kinds of choices that the budget control act and the sequester part of it were written to force congress to make, to be arbitrary. and invim nature and that remains a fact. what is also true is as time progresses and, you know, savings are made by eliminating

a contract, for example, or ending new purchases of equipment for a period of time or other things that can be done, you know, changes about the prognosis for furloughs can be made. but that is not uniform -- any more than it was uniform a month ago, it's not uniform now. and this will fluctuate as time goes on. it'll fluctuate next month, and if the sequester continues, it will fluctuate on and on and on after that as the agencies adjust to that budget picture. >> does the president regret at all not doing more than like the one he's going to do tomorrow, the one he's going to do on monday geffen that when you look at public opinion polls, they show support is dropping t not just what's happening in congress, but actually what's happening with the american people? >> well, i think the data on this is quite mixed, and when it comes to some the measures we've just been talking about including closing loopholes in

our background check system, the data remains very strong and overwhelming in support of doing just that. and i, you know, the president has been doing events, has been talking about gun violence. i think the most memorable moment i can recall from a state of the union address in all the time i've been in washington occurred at the end of the president's state of the union address this year -- >> i mean going out, going on the road, talking to people like he's going to be doing on tomorrow and monday. >> i have a list of everything the president and vice president have done, the dates are january 19, january 25, january 28, february 4, february 11, february 12, 15, 19, 20th, 21st, these are all presidential and vice presidential engagements or events regarding this very important issue. so i would -- the fact that it's a challenge is something that was recognized at the outset by everyone including this president, including the vice president. the fact that it would require

concerted and con isn't effort korb con isn't effort was recognized by the president and is reflected in the actions he's taken ever since newtown happened. so that -- tomorrow's event, monday's event, that's part of this process. last week's event, part of process. >> jay, on north korea, one foreign policy expert said kim jung-il doesn't know where the line was and that kim jong un doesn't. does the president share that assessment and does he, therefore, see this current leader as being more dangerous and less predictable than his father? >> i would say that we are judging the regime by its actions and its -- mostly its actions, but also by its rhetoric. and those are the assessments we make. and it's not personally based -- personality based. the fact is that the pattern we

have seen of bellicose rhetoric and provocative behavior long predates the current leader of north korea. and as veterans of previous administrations can tell you. so, you know, assessments about the current leader are, obviously, things that outside experts make and inside experts make, but we as a policy matter, we base our policy decisions on overall actions and behavior by the regime. yes, sir. >> yeah, on the brain initiative that the president outlined today, you described $100 million as this small initial investment. >> i think a small investment compared to the potential benefit. >> a lot of the experts say it's going to take years and billions of dollars, the president himself compared it to the apollo program which cost hundreds of billions of dollars,

how many years, how much money do you think it will ultimately take to achieve -- >> well, i think the scientific experts are best at predicting how soon breakthroughs will occur, and even they, i think as history proves, are not likely to be dead on, spot on if their predictions. it's impossible to know. that's what makes this essential and exciting, because the potential is huge, but it requires investments that allow for the necessary innovation and research that can bring us to that threshold. so, you know, the president believes this is the kind of ting that we ought to be doing, it is the kind of thing that republicans and democrats have supported in the past as part of our economic development. and he's very enthusiastic about the prospect for discover ri and innovation in this field as are so many experts in the field. >> so you said $100 million was small relative to the potential. do you agree just small relative

to the overall costs involved in this issue? >> i don't have a projection to lay out to you based on, you know, what revelations might come from early stages of research and innovation and development. what i can tell you is when we talked about budget priorities and we talked about the fact that the president's budget will, the initiatives that are in it will be paid for and that it has always been his position whether it's investing in infrastructure or in medical research that there are things that we need to do investment wise even as we trim our budgets and reduce our deficits that are essential to future economic growth, and this is one of them. >> follow up -- [inaudible] >> jay, the u.n. today passed a treaty regulating world commerce -- [inaudible] the senate last month opposed a

symbolic treaty along those same lines suggesting it's going to be an uphill battle to get it through for ratification. how are you going to get it through? >> well, i think that i can say two things. one, we are pleased with the outcome of the conference, and the text achieves the objectives we set out for this negotiation. and we are pleased to join the consensus on the, as is the case with all treaties of nature, we will follow normal procedures to conduct a thorough review of the treaty text to determine whether to sign the treaty, and what that timeline is i cannot predict to you now, and we are just beginning the review process, so i wouldn't want to speculate about when that process will end. but we're certainly encouraged by and pleased by the outcome. >> do you have any idea how you're going to get it through the senate? >> again, i think before we get to that we're going to review the treaty and assess it and make judgments accordingly.

barb. >> i just have a question about background checks. you pointed out that many polls -- [inaudible] 90%, yet michael bloomberg's spending a lot of money on this. organizing for america has made it their maiden grass roots effort, and the president's been doing all these evented you cited, so what is your theory as to why this seems to be losing steam in congress? >> well, i would at least in part suggest that the process continues, and i don't, you know, i'm not sure that i would agree with, you know, the assessment that it's losing steam. i think it has always been challenging. i think the predictions that any element of this legislative package would be easily passed were incorrect and probably naive if and when they were made whether it's this particular aspect of it or any others aspect of it. this has all traditionally been difficult. i would note that, you know, i

would send you to members of congress to explain their position on these issues be they're if opposition, why they're in opposition, why they're in opposition to a proposition that has 90% from the american people and that, and that enjoys support in every region of the country and from republicans and democrats and independents. having said that, we, you know, there are obviously challenges, there have traditionally been challenges to moving this kind of legislation. i would note that on the background check issue a number of republicans are on the record supporting the idea of closing loopholes in background checks. a number of them voted for improving our background check system in the late 1990s, and, you know, i think there's a reason for that. and it's important to explain to readers and viewers and listeners, and that is that, you know, background checks are the quintessence of a common sense approach to how to address this

problem. i think most americans believe it makes absolute sense to check the criminal record of someone before they are allowed to purchase a gun. because they're not allowed to have one otherwise. so we're simply saying let's enforce the law through an effective background check system to keep weapons away from those who should not by law have them. that's why gun trafficking measures are so important as well. so, you know, having said that, this is always going -- it was always going to be a challenge, and, you know, that's why we're pressing hard to get it done, why the president's out there making the case, the vice president's out there making the case, why legislators from both parties have been talking about it. and we're going to continue to oppress for action on it -- continue to press for action on it. >> some polls are above 94%. i'm just bond oring, there must be a theory for this. is it the power of the nra? you guys must have some idea why you think this particular piece of it is proving to be so

difficult. >> look, i used to write articles about this, but i'm going to leave the political analysis to others and simply say that for a host of reasons. advancing legislation that is common sense and reduces gun violence has always been a challenge and probably always will be, but it is essential to try to get it done and move forward on it. and the american people expect that it should be done, and they, and they recognize the object, you know, rationale behind closing loopholes in the background check system. making sure that people who should not have a gun by law do not obtain a law, cannot obtain a gun in a very simple -- and this is about, again, i know i'm repeating myself to you, but for those who are not engaged in this issue all the time, it's important to understand that system exists. this is not about creating some

registry or background system. this is not a registry and not be a registry. it is a background check system that is in place, but there are holes in the system, and those holes ought to be closed. april? >> since the nra and other gun lobbying groups are so powerful, has the white house thought about meeting with groups like the nra again since the vice president's meeting with the nra? has the president thought about it? has the vice president thought about another meeting? >> well, we're working -- when it comes to the legislation, we're obviously working with lawmakers of both parties and, you know, that particular organization has connections and contacts on capitol hill. i don't think there's any danger this us not knowing where they stand on certain issues and vice versa. you know, there has been outreach, and i'm sure -- i'm not saying there won't be continued outreach, but on the

legislative side of this, you know, the legislation has been written, it's moving through committees, and we're, you know, we're engaged in that prosecution right now, and we are working with lawmakers in both parties in trying to achieve a compromise that can make this happen, especially when it comes to the background checks. >> unrealistic -- [inaudible] i mean, this whole effort started out much bigger than what it was, and it's boiled down to you're talking about a consensus on background checks. and much of the holdup to include ammunitions, the reduction in magazines, is dealing with the nra and the ammunition manufacturers. why not come together and talk it over to possibly -- >> well,ing first of all, that's what the president and the vice president -- the initiative -- >> that was months ago, and they're getting ready to come to conference. >> well, months ago, first of all, it wasn't that long. it was fairly recent. and it was what helped lead to

the initiative, the package of initiatives that the vice president put forward with the president. and, you know, look, there's a lot, there are a lot of conversations happening around this issue. and, you know, the president's views on what he believes we should do are clearly stated and reflected in this proposal. and i would, i would challenge that, you know, it's all come down to one thing. you know, there are other aspects of this that have been moving forward, and, you know, we are encouraged by that, and we're going to continue to press to get it done. >> [inaudible] realistically, once it is all said and done and a vote happens, what do you expect to pass realistically? >> i would hesitate to make predictions on any of this for the very reason that i've been saying, and that is that it was always going to be a challenge. and if it, if any of this or were easy -- i mean, it's the sad fact about newtown is that,

you know, it's not the first of its kind. and, i mean, the age of the victims made it particularly horrific. but there have been other incidents, at virginia tech and aurora that are similar, and, you know, the idea that suddenly all of this would become easy when it had been deft in the past was never d difficult in the past was never credible, but that doesn't mean we shouldn't be working hard to get it done. christy. >> >> thank you, or jay. is the president planning on weighing in on the los angeles mayor's race? [inaudible] >> i appreciate the question. in keeping with past practice, when there's a primary, a democratic primary in a race like this, we're not -- the president won't endorse any candidate. mr. garre setty is, of course, someone who's been a longtime supporter of the president. the president appreciates that support, appreciates their working relationship. but we won't, there won't be a formal endorsement.

>> do you expect they'll see each other when the president's in california? >> i'm not sure. i think, you know, i think we're in northern california. but -- alexis. >> jay, in the president's visit to colorado and connecticut, the common theme among the two states is legislative action in the state at the state level. i'm assuming the president's going to talk about that when he's in both states. what are the common denominators that the president sees in those two states that compel them to move in a way that he would like to have congress pay attention to? i want to know the themes other than horror being in their midst. but why would they take action when the nra has been very active at the state level too whereas congress is very reluctant? >> well, i might look to state experts to make that analysis. i think that you're right that action has been taken in both states, and i think the thing that connects them terribly is the tragedies that occurred recently in those states.

beyond that i think, you know, others might have a better assessment about why bipartisan action has happened many those states. but -- in those states. but i think that reflects the capacity around the country for bipartisan action incluing here in washington. >> and just a follow up, be the president doesn't see the willingness in congress to do what he would hope at the federal level, to what extent does he hope the states themselves in a peaceful basis can begin to act? >> well, the president's focused right now on the proposal he put forward, the set of proposals which includes pieces of legislation at the federal level, and that's what he's focused on. you know, obviously, he is, i mean, it is important that other states address this issue as they see fit. but right now we're focused on the president's initiative. mark? >> to to north korea again. >> uh-huh. >> you spoke about the mismatch

between rhetoric and -- [inaudible] on the ground and mobilization. specifically on the reactor, have we seen any signs, any preparations that the north koreans are going to try and restart it? and beyond that, does the president, would he accept the restarting of that reactor? would he take steps to stop it? >> well, we do not accept a violation of international obligations by the north koreans, and we have taken action through the united neations and elsewhere -- united nations and elsewhere through sanctions and ore measures to put pressure on north korea for violations of its obligations. i'm not going the predict what next steps will be if this action is followed through on. i believe it was an announcement that north korea just made. i don't have any other information to impart to you about that facility. you know, but again, this is in keeping with a pattern, and that behavior has been met with and responded to, met with action by the international community,

responded to up through consensus -- often through consensus as it was at the security council not long ago. john christopher. >> this is the 60th anniversary of the so-called armistice which the kim jong un has basically rescinded. the conflict there has been going on during 12 presidential administrations. has this administration been in touch with any of those individuals going back to the truman administration who can lend some insight and some regional acumen, basically, to the president in terms of advice? >> well, i don't have any specific conversations the president has had to read out to you. the president is constantly speaking with those with expertise in different areas of both foreign policy and domestic policy, and i'm confident that he has had considerations with experts outside of goth on this issue -- government on in this issue, but i have no specific ones to read out you. it is certainly the case that

this is, you know, north korea's actions have been something that successive administrations have had to deal with, especially the last several. >> thanks, jay. >> last one, ann -- i'm sorry, i did say connie. >> thank you very much. this is a follow up. will there be any private investment into this, and is there any congressional -- [inaudible] and would you announce the clinical trials for people who need them -- >> i don't think it will be for the white house to announce clinical trialses, i would point you to nose overseeing -- those overseeing the initiative at the agencies the president mentioned today. i'm going to go out on a limb and suggest that there might be some congressional opposition. i said earlier -- [laughter] that there has been indication that there is bipartisan support for this kind of initiative, this specific initiative. but i, you know, i can't predict

where that will end up. what i do know is that this is something that does not have a political or partisan flavor to it. this is the kind of potentially breakthrough research that results in enormous advances in the health of the american people as well as enormous economic advances potentially. so it's the kind of thing that we have done in the past successfully, and we should continue to do. that's what the president believes. thank you. [inaudible conversations] >> i think we put out a lot of paper on this in terms of how the investments are made and leveraging issues. yeah. >> should -- [inaudible] spill in arkansas that blackened a neighborhood have any impact on the state department or the president's consideration -- [inaudible] >> well, first of all, the assessment of that particular pipeline is ongoing at the state department. and they assess a range of

criteria. obviously, you know, the assessments they make based on environmental impacts and the assessments that were made in the past, you know, had to deal with some of these issues. but i don't have anything for you specific on that because it's a process that's underway at the state department. >> have you -- [inaudible] >> i have not. i have not. >> [inaudible] >> about that issue, no. thanks. [inaudible conversations] >> we heard press secretary jay carney talk about north korea's nuclear policy. secretary of state john kerry is at a meeting with the south korea's foreign minister live here on c-span2 at 4:20 eastern. jay carney talked about gun legislation. here's a few minutes of elijiah cummings, the top democrat on the house oversight and

government reform committee, about a business -- [inaudible] that would make gun trafficking a federal offense. >> now, i've been asked apart from our gun trafficking bill whether i support other gun-related legislation, and the answer is, i do. for example, i believe fixing the background check system is one of the most common sense actions we can take to prevent criminals from getting guns. and i think that it would complement our gun trafficking legislation very well. background checks would prevent many criminals from obtaining guns, and the anti-trafficking legislation would impose strong new criminal penalties on those who try to get around the system.et for myself i have chosen to focus primarily on guncus trafficking legislation because it isly an issue i've been work, on for several years in the

house. i have worked painstakingly with both democrats and republicans to slowly build a bipartisan coalition behind this bill. and i strongly believe that when people understand what this bill does, they will support it wholeheartedly. in fact, even the nra has come around over the past several months. there are only two groups who sit opposed to this bill. let me say that again. are only two groups that should oppose this bill. criminals and people who want to buy gun cans for criminals. if congress can pass firearms po trafficking legislation and universal background checks, we will have made real, substantive reform that will help to reduce gun violence across our great nation. >> we'll have all of representative cummings' remarks

later today in our schedule, and you can watch it anytime at c-span.org. we also covered an event today on the release of a report from the national rifle association's national school shield program. the director of the initiative, asa hutchison, outlines proposals that would allow teachers to carry firearms in schools after undergoing a training program. here's part of what he had to say. >> the, we've presented a model training program for school resource officers that is an enhancement of what they currently undertake and are required. it's 40-50 hours, 40-60 hours of comprehensive training for the school resource officers. that covers everything from weapons retention to coordination with local law enforcement, and that is an appendix in the presentation. we also have prepared for the first time that i'm aware of a model training program for

selected and designated armed school personnel. now, this is probably the one item that catches everybody's anticipation. now, why are we, is this part of our recommendations that we have this model training program? first of all, there is the incident in pearl high school in 1997 where the, an active shooter went into the school and killed two students and wounded others. there was no school resource officer. the assistant principal, joel myrick, left the school, went out to his truck and retrieved his .45 caliber semiautomatic firearm, returned to the school and disarmed the assailant. and that's an example of where the response is critical. and that is what disarmed the assailant and saved livesment and the key is -- lives. and the key is reducing that

response time. if joel had been trained, if he had had access on his person, he might have saved more lives even in that instance. and so, and one of the findings of the team went through one school that did not have school resource officers, and they were already planning to arm school staff. for the protection of the kids. but whenever the inquiry was made and said what kind of training do you have, it was clearly insufficient tape -- training. and schools are undergoing that process all across america right now without adequate direction on what is a good training program, a model training program for armed school personnel. let me emphasize this is not talking about all teachers. teachers should teach. but if there is a personnel that has good experience, that has an interest in it and is willing to go through this training of,

again, 40-60 hours that is totally comprehensive, then that is an appropriate resource that a school should be able to utilize. the second recommendation is that we have to adopt, the states need to consider changing the laws so that it allows the firearm to be carried by school personnel when they go through this model training program. and so we attach add an appendix a model state law that can be considered for this purpose by the various states. >> you can see the entire nr ark event -- nra event later in our schedule or anytime at c-span.org. some news, the u.n. general assembly today approved the first treaty regulating the international arms trade. approved by a vote of 154-3 with iran, north korea and syria voting no, the resolution would

not control the domestic use of weapons in any country, but it will require countries to establish national regulations to control arms transfers. and coming up live here on c-span2 this afternoon, we'll bring you remarks by former treasury secretary hank paulson. he's speaking about u.s./china economic and environmental challenges at george washington university. that gets under way at 4:30 eastern. again, that's here on c-span2. and yesterday former federal reserve chief economist david stockton spoke about america's economic outlook here in washington d.c. while optimistic about the economy, he cautioned the road ahead is still bumpy. hosted by the peterson institute for international economics, this is 90 minutes. >> i'm adam pozen, president of the peterson institute for international economics, and it is my singular pleasure to introduce our esteemed staff for our semiannual global economic

prospects meeting. thank you all for turning out today. this has become one of the features of the institute's calendar, something we look forward to internally, and i think many of you externally look toward to. and it's not just fun, it's useful. we provide the kind of insights that i don't think for all our friends and the initial and for-profit forecasting community do, we provide a set of independent insights that i think usefully and importantly supplement what you are all thinking about the global economy. so just to remember for the future, so twice a year within a couple weeks before the fall and spring bank meetings, bank fund meetings, we're going to be here trotting out our global economic prospects meeting, and we'll look forward to seeing you each time. we're now under the leadership, and as far as this goes, of david stockton who many of you

know and, in fact, is a star attraction. david wuss, of course, for 11 years the head of the division of research and statistics at the federal reserve of board. he's a senior fellow here and also senior adviser at macroeconomic advisers, and we're delighted larry meyer -- who he and i tug back and forth on david's sleeves -- is here today. but we're also, to make in this forecast run, are drawing on all the regional expertise, all the country expertise and some of the issue expertise that the institute has and its staff. every time we meet you should expect a statement about the u.s. outlook led by dave, talking about the u.s. forecast over the next two to three years and related issues. and you should also expect a speech or presentation on china, usually by the inestimate about nick lahrty at least every oh time. but we also try to feature and bring out regions and risks and

trends that are not necessarily in everybody's direct line of sight. and so every time we're also going to be two top call presentations. many of you know this before, but we have a jazzy new institute powerpoint format, so i wanted to get it out there for you all to have this drilled into your heads. just to beat the point home, we usually get some things right that the consensus misses, so just to speak about the last time we gathered which was november 8th, dave came out and said the u.s. housing recovery is for real this time, inflation isn't a threat, and the fiscal cliff won't happen. nick presenting on china said, well, we're not yet, at least, in the middle income trap for china, and there is a reform path the leadership can take that will keep growth in the 8% range. and i was talking about the euro area being not going anywhere, not disappearing, but being bounded above and below by the policy choices meaning more severe recession in southern

europe than the european commission was forecasting at the time. and that set of forecasts looks pretty good so far. those were important voices to be heard, and you should have listened to us. so let's tell you what you should be hearing today. [laughter] so first off, as i mentioned, will be dave stockton who's senior fellow here, and we'll be talking about the u.s. outlook. i promise my staff -- not my staff, my team, our teammates -- not to give away their bunchlines. so dave will say something about the fed. then we're going to have barbara who's a research fellow here at the institute, barbara joined us a few years ago from the inter-american development bank. she's been or very active in our trade program co-authoring recently on tpp. but her real expertise and love is latin america. she's currently doing very interesting project for us on latin american infrastructure development and has a book coming out in a little while about what happens next in cuba

which may give you some hint of the kinds of things she's going to talk about today. and then finally, we have a man who has become to europe in this washington what -- in washington what nick is for china, jacob kirkegaard. jacob is, i'm proud to say as i know fred joins me, is our home grown talent of this generation. and is now a senior fellow and also a rock star, many of you hear him regularly even if you can't avoid it on npr with neil lehrer and so on. and jacob's going to tell you some variant of the fact that everything's all right in the eurozone which is, of course, his standard position. [laughter] so the way this is going to work is each of our presenters is going to present in order. we're not going to take questions at the start. and then the three of them will join me up here, and we will take infinite number of questions from the floor. but first, if i could ask dave stockton to come up.

>> thank you, adam. it's a pleasure to be here today. i tried not to take it too personally when adam scheduled the global economic outlook meeting for april fools' day, but for those of you familiar with economic forecasting, that might seem entirely, entirely appropriate. so what about the u.s. economy? i think there are signs that the u.s. economy now is slowly gathering strength. i think it would be probably inappropriate to describe it as an inflection point, that would probably give it a little too much drama. but i do think we are experiencing some springtime for the u.s. economy. but one of the messages that i would want to convey is that as springtimes go, this is going to be more like bangor, maine, than atlanta, georgia. it's going to have some hot spells and cold spells, and it's

going to take a while, and it won't always feel like it's forward progress. but i think by late in the year, i think we're going to be feeling and experiencing something that feels a little bit more like some entrenched momentum in the economy. so my outlook spurs some modest pickup in the activity, and as far as inflation moving up a bit but remains below target throughout the entire, the next three years. for those of you who were here in november, you'll note that the 2.3% that i'm forecasting for 2013 is exactly what i was forecasting in november, but that isn't because things have turned out exactly as i expected. in fact, i'd say the underlying data on the private sector for the u.s. economy has been stronger than i had anticipated. as adam just noted, i was not expecting, i was -- that we would go over the fiscal cliff. that was going to be headed off.

but i didn't think we'd also be getting as much restraint from the sequester. i suspected that would have replaced. but on net still looking like an improvement relative to the experience of the last year, and enough of an improvement over the course of 2014 and '15 to put the unemployment rate, to keep the unemployment rate -- although slowly, gradually declining path. and as the slack gets taken up in the economy, i do expect inflation to edge up, but i would expect, again, that we're not going to breach the fed's -- reach the fed's 2% target over the course of the next three years. so the outlook for the u.s. economy is sort of curing -- of occurring in a global environment where i think the activity outside the united states is going to be neither a significant support, provide senator support for the economy or impose significant drag on the economy. jacob's going to be talking about the euro area, but

basically his outlook is that things are going to be flat there on net for this year with a little bit of improvement thereafter. i think incoming governor carney is going to have his work cut out for him in the u.k. where there is significant amount of fiscal drag and still considerable credit markets that are going to be holding back activity there. there will be some improvement over the course of the next couple of years, but still a pretty soft, pretty soft story. in japan, maybe some improvement this year given both fiscal policy and monetary policy if -- in japan providing a boost, but growth probably running 1% over the course of the next, in 2014 and 2015. china, maybe 8-8.5 percent. my colleague, nick, would want me to make sure i indicated that the risks to that outlook are weighted to the downside.

other emerging and developing economies, i think it's going to be a mixed bag, but generally solid if unspectacular growth. and barbara will be shortly talking about a region of the world, latin america, where that mixed bag really is very apt distributer. so the bottom line -- descriptor. so the bottom line is i think it's going to be neutral for growth this year, probably a small plus in 2014 and 2015. the real improvement for the u.s. economy is coming in the private sector and particularly the household sector where we're seeing some genuine ongoing progress. two theories here, the blue line is the household financial obligations ratio which is basically a debt service version measure supplemented with rental payments, insurance payments, other kinds of very periodic payments that must be made. you can see there's really been dramatic improvement here.

we're back to levels that we haven't seen since the mid 1980s. to be sure, some of that improvement occurred because households walked away from debt that they had incurred. obviously, the low interest rate environment that we're currently experiencing is helping there. but even if you were to plot just debt to income, it's also come back down, and we're seeing significant signs of improvement for chin again si rates, a rather dramatic decline. and i think that's going to be providing some wherewithal more pick up in spending over the course of the next couple of years. the this is focused, this slide is focused on the liability side of the balance sheet, but the asset side of the household balance sheet is improving as well. of course, a big part of that is the improvement that we've mad the stock market of late. but we're also seeing improvement coming about through the housing sector. i think in november i posed the housing recovery as a question,

and i said i thought, indeed, that we were experiencing a recovery. i think the subsequent data have tended to support that, provide considerable support for that. the house prices have increased rather dramatically over the course of the past year by either the case shiller or core logic house price measures. i would think those price increases are likely to slow over the course of the next few years. not retrace, but simply back off the current high pace that they've had in part because there is a significant shadow inventory of homes, homes that have been kept off the market by people who have been waiting for the housing market to improve. and now that that improvement so occurring, i think we'll see some of those houses come back onto the market and price increases will moderate some from where they've been. we're seeing the benefits of that firming in house prices and firming overall in the economy, but especially in the house prices and in terms of housing

activity where housing starts have moved up. and, you know, you could see physical about six or eight months ago it was really unclear whether we were just seeing some, you know, noise in the data or actual ongoing improvement. i think now it's pretty clear that we're seeing a significant improvement. and we've got a long ways to go, because the equilibrium housing starts to account for increases in household formations, trends in second homes, demolitions is probably close to 1.6 million. and my expectation would be over the course of the next three years that we'd begin to move towards that, although we don't reach 1.6. this forecast is predicated on a 1.5 million unit pace in 2015. so there are still -- there is still a ways to go for the housing recovery. and, obviously, the improvement in house prices is not just providing impetus to construction activity, but i think it's helping out on the

household wealth in terms of providing, again, some opportunities for greater spending, but i think there are fewer mortgages that are underwater and, therefore, would be the opportunity for households to refinance those mortgages, reap those benefits and probably improving the overall lending picture. ..

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at least state and local governments which have been a big drag are moving more toward neutral now. we're looking 1 1/2, to 1 and 3/4% fiscal drag this year. many people have been very, i think encouraged by the fact that consumer spending has held up so well as it has. after the payroll tax increases and marginal tax rate increases earlier this year. it just, we, at this point we have a preliminary reading on spending for february. we don't really, i don't think we can take too much confidence yet that is going to somehow going to be easily absorbed by the u.s. household sector. it is a pretty big hit. and we haven't begun, even begun to see the macroeconomic effects associated with the sequester which went into the effect at the turn of the month. to think, again, that amount of fiscal drag will not show through to overall activity i think is too optimistic.

so i'm expecting, in fact this fiscal restraint is going to show through in a weaker middle part of this year. probably starting in the second quarter, but extending on, probably into the fall. so, so much of the, so much of the public discussion here thus far has been, jeez, the sky is falling. the sequester will create a massive amount of economic disruption to, no, it is not falling everything will be just fine. macro part, there may be many micro disruptions but the macro part will be some restraint on activity we've yet to see. which brings me to monetary policy because i think the drag associated with fiscal policy, is certainly one of the important factors in why i think monetary policy is going to be looser for longer than most people currently anticipate and that's an important element in my forecast.

not just following along with the forecast but providing support to activity, to the acceleration activity that i'm expecting. so on the funds rate the fed told us thresholds for rate hike, unemployment crosses 6 1/2%, inflation one to two years ahead is projected to move above 2 1/2%. given my forecast we don't get to 6 1/2% unemployment until the very end of 2015. that is when i expect the first rate hike to occur. on the inflation side, not only do we not get to the 2 1/2% threshold, we don't get to 2% at least in my forecast so i think we're to the likely to see any move on the funds rate until late --, they call these thresholds and not triggers. probably when the unemployment rate moves below six 1/2, the fed will begin to move. on asset purchases the fed indicated it will continue the program on asset

purchases until the labor market improves substantially or the costs outweigh the benefits. what are the costs they're looking at? they noted three costs. one financial stability. here i think certainly they have pointed recently to some increasing concern about the corporate bond market insome areas where corporate bond covenants look like they're weakening some. there's farmland prices have been increasing rapidly. there is not a whole lot yet, however, to indicate at that there are significant, instabilities developing in the financial markets of the dimension that would cause the fed significant problems. another issue that the fed has raised is the difficulty of exit from its current policy of accommodation. you know, that is not, that will be, there are some technical issues. i do not think that the fed is going to have any difficulty engineering restraint when the time comes. i think in fact they're going to be able to do that.

maybe not smoothly. maybe not without some bumps but i think they will be able to do this. remittances to the treasury. the fact when the fed in fact starts its program of withdrawing monetary accommodation that there are rematenesses to the treasury will go-go down. this is a purely political issue the fed will be able to manage and i don't see this as problem. another one the fed hasn't mentioned but you hear occasionally is the costs, one of the costs of the fed's accommodation is impaired discipline on fiscal policy but i think that concern is entirely misplaced. it should not be the job of the central bank to try to impose discipline on fiscal thors and my colleagues, adam posen, thomas hillenbrand, actually had a nice paper looking at relation between monetary accommodation and fiscal consolidations. they find in fact monetary

accommodation increases the probability of effect of fiscal consolidations in some sense that makes sense in the context of a stronger economy. it will be easier to achieve that, that consolidation. so i don't think that's a very convincing argument. on the benefits i think the fed has provided considerable support to the economy through easing of financial conditions. joe ganion at the institute estimated pretty sizable effects of in terms of the fed's large-scale asset purchases on financial conditions. and my colleagues at baker economic advisors likewise come up with pretty big estimates. so i think the benefit cost ratio still looks pretty favorable to the fed. we've all seen those replays on tv of the football player streaking down the field and spiking the football thinking that he is in the end zone only to find out he

fumbled it on the 10 yard line? so the fed isn't going to make that mistake. i think they will carry that ball across the goal line and they're going to turn around and look to double-check they're in the end zone before in fact they put that football down. i think we're looking at pretty accommodative, accommodative policy. one. big reasons is there is huge amount of slack remaining in the labor market. so the goal line is still a long ways off and the motivation for accommodative monetary policy is pretty, pretty large. you know the fed often describes its concern about the labor market in very human terms. compassionate. we want that, to be the case. but there's cold hard calculation pogue on as well, which is, when the two percentage point unemployment gap, we have four percentage point output gap. that is $550 billion of lost output per year. so the motivation is pretty,

pretty significant. what about the fed's other aspect of its dual mandate? what about inflation? there just isn't any inflation problem at present measured by core pce, inflation has been well below the 2% objective. measured by total pce, inflation has been below the 2% objective. measured by unit labor costs, a measure of business cost pressure, we're at 2% recently but we've been mostly below 2%. i don't think that is going to be a, a, constraint in the fed anytime soon. finally you might ask, this is true, this is all backward looking. but when the economy begins to improve? i just don't think, i see very little risk from declining slack. that we'll get an upsurge in inflation from an improving economy. here you can see the most recent period, 1985 to 2000, inflation has become much less sensitive to movements

in overall labor market slack as was case previously. so even if we get a more substantial drop the in unemployment rate i think the upside risk to inflation is relatively minimal. and, what about stable inflation expectations? so, our concern that inflation expectations might take off, so here, i plotted both a market-based measure and survey of economists. you can see there really hasn't been any movement to speak of in an adverse direction. the thing that i really want to call your attention to on this slide is not the most recent observations but this is 12 years of data on inflation expectations. and in 12 years we had 9/11. we had two recession, one small recession, one great recession. we've had two recoveries. we had a housing bubble. we had a housing bubble burst. we've had, you know, some significant increase, a substantial increase in the fed's portfolio. none of that has had much of an effect on inflation expectations. why in the next couple of

years would we have more inflation expectations in the environment we're currently anticipating seems small. so in closing i say i'm pretty comfortable with a forecast in which there's some underlying improvement, healing in the private side of the economy. some decline in the unenemployment rate. pickup in inflation. and, whereas i would say over the last three years, i have characterized my forecast as having more downside risk than up side risk. i would actually characterize those risks now as reasonably well-balanced for the first time. so i will stop there. [applause]

>> thank you very much on that somewhat positive note we will turn to latin america. as david mentioned. latin america is one of the reasons solid unspectacular growth and a mixed bag. that is pretty accurate description. latin america has turned into pretty good growth last second dade, 5% growth. poverty rate is the lowest it's been in three decades and the middle class has grown by about 50% in the last decade. so that so somewhat spectacular. but behind this growth there are two latin americas. the region is split in terms of political philosophy and economic model between what we call the 21st central capists and 21st century socialists. we look a couple of events that might be marked as

turning events. recent events that might tip the boat in some cases into more pragmatic economic policies and in other cases might continue the consolidation of the economic model. the first of course is the death of hugo chavez on mark fifth, the president of venezuela who since taking office in 1999 has changed the political and economic landscape of his country. has had a significant impact on the rest of latin america. so what will happen to 21st century socialism after chavez? the second is argentina which until about a year and a half ago saw robust economic growth despite increasing inflation, despite currency pressures and rampant price distortions, protectionist trade measures and being cut off from foreign capital markets. despite this investment, foreign direct investment continued to fall into argentina and argentina has continued to grow. i think that the

expropriation marks a turning point. obviously the bond debt case which is being decided right now has some implication for argentina. the last in cuba, castro has put out an exit plan. raul castro is named as successor and set a deadline on his own administration. another case is not a turning point in terms of economic models but marks a turning point in the consolidation of a model. mexico has seen relatively unspectacular economic growth. the recent economic reforms undertaken by the administration may mark a turning point in that. so the mixed bag. latin america is mixed in terms of economic policy and economic, economic development model. the 21st century capitalist are the countries that continued to implement the macroeconomic reforms listed

in the famous washington consensus coined by our former colleague, john williamson. they stablized their macro economies, maintained prudent fiscal policies while implementing policies to combat poverty and enhance their social capital. their largely making efforts to integrate into global supply chains. have environments that are open to trade and investment and observe the international rules of the game. on the other side we have the 21st century socialists led by venezuela which common elements are populist policies, a strong executive, expansionary fiscal policy, price controls. idealogically they tend to be anti-establishment. several have engaged in significant nationalizations or expropriations of businesses is probably the most famous being argentina's takeover. they're also less willing participants in international norms. in recent years bolivia, and

venezuela have pulled out of the national center for the settlement of investment disputes and ecuador currently has legislation pending that would pull it out of the u.s. bilateral investment treaty. this just to see that bifurcated nature is reflected in risk spreads. argentina and venezuela's cdss are several basis points above the rest. delving into venezuela, we expect no real change in political control in, when the elections take place in two weeks. all signs point to nicolas maduro, chavez's hand-picked suck -- successor to win the elections. will he be able to continue chavez's economic policies. maduro or whoever wins the elections inhertz a much

more difficult economic scenario. venezuela's gdp is lagging after growing an average 10% per year in 2004 to 2008. venezuela has grown just under 2% in 2009 to 2012. this is despite oil prices being high. venezuela's oil prices are over $100 per barrel yet venezuela hasn't been able to continue to grow. so venezuela continues to be dependent on oil but oil production in venezuela has diminished, fallen by about 25% since 2001. at the same time, venezuela has not been a paragone of fiscal virtues saving while times are good and commodity prices are high. in fact budget deficits have continued to increase and one can expect more spending ahead of the upcoming elections, potentially after that. venezuela also currently has the 52-week highest inflation rate in the world.

in february the administration devalued the bolivar from 4.3 to the dollar to 6.3. this was in the, it was politically unexpected but if the black market rate, however, that's measured has been, has indicated that the level is still relatively overvalued. this devaluation may be a sign after shift toward more pragmatic economic policies. it could also reflect the strength of the pressures on the economy. so do we expect president maduro will be able to continue chavez's 21st century socialism given the economic environment in venezuela? we expect social programs will continue, probably with cuts but that some of the other spending particularly on foreign policy will not be able to continue. argentina seems, sees some

similar pressures as venezuela. argentina grew robustly in the 2000s. however economic growth is abating. economic pressures include high inflation although that's not recognized yet officially how high it is. declining foreign curren reserves. although it has still about $40 billion in reserves that has been declining. and that leads to pressures for a significant devaluation. political pressures are also starting to be seen. more and more people have been coming out to the streets, banging pots. there has been decreasing union support. unions have been one of the most robust supporters of this administration. the imf has officially accused the administration of doctoring under the circumstances data and has threatened punishment if this is not rectified and the recent bond debt rulings in new york seem to add some increased pressure for argentina.

argentina throughout all of this has followed expansionary monetary and fiscal policy. looking at exchange rate and inflation rate, this is the official versus unofficial, inflation, inflation is increasing both in the official and unofficial measures and so probably there needs it be some reckoning here. on the panel, on the left, you see the declining reserves and, so, certainly it is no the running out of reserves but this is not a good trend, and, the peso continues to be overvalued. so these are pressure points. increasing additional pressure points are the commodity prices which buoyed argentine economy throughout the 2,000s are tapering off. you also see slower growth in argentina's export markets. brazil is the main export market. brazilian growth is slowing. china also and despite

dave's predictions some growth in the united states, that probably won't be enough to pull argentina up. mexico has been quite surprising in terms of what the president has been able to get done over the, yet short tenure. mexico's growth has been tepid over the past decade. 2002 to 2010, growth was at about 2%. despite low inflation, debt and steady interest rates, recent reforms may boost this growth. mexico has undertaken pretty strong labor reforms by making the labor market more flexible. education reform, which could overhaul its failing education system. coupled with strong signs towards entrenched interests by, for example, arresting the head of the education union.

telecommunications reform, this also the government estimates that this reform, when it is implemented will add a percentage of growth to mexico's economic growth. the big question is where will the pact between the parties continue and enable mexico to take much, much-needed energy and fiscal reform. finally, reforms in cuba. under fidel castro cuba has seen the most significant reforms in decades. they losened controls. cubans are able to travel without having to procure an exit visa. you see some of them coming through washington recently. cell phones are allowed. there is loosening of the economic rule of the state as massive public sector layoffs and openings for private enterprise. these are probably faster than cuba watchers would have expected but they're still quite slow. and so will cuba continue to reform?

yes but with continued relentless gradualism as some have coined this. one question in cuba, what will be the impact of the death of chavez? will that change the trajectory or the speed of reform? it might make the administration have to reform more quickly than they would have liked. so that's something to watch. growth in latin america as always is highly dependent on external factors. and so the growth of the u.s., eu and chinese markets will determine how, in large part how latin america goes, commodity markets are important. so these cases that we discussed are actual turning points towards more market-oriented economic policies i would say yes but with a caution that this will probably be a very, very slow and gradual process. probably not without bumps

in that particular road as well. thank you very much. [applause] >> well, thank you very much. i guess i should start by saying it is obviously a particular pleasure to be able to give this particular euro area outlook because i get to start by saying that my boss was right and everything he said six months ago. [laughter] but as the title which you'll see in a little bit indicates, i'm not going to tell you that everything's great in the euro area but i will once again, i guess say that you shouldn't overdo the risks either. and i guess the way it think about that, just like, you know, during the election last year where one side of the political spectrum was told when it was worrying too much to take a prozac and remake silver.

next time you read that, this time the euro is going to collapse, there is 60% or 90% chance that this or that country will drop out, i recommend you read work we do here at the peterson institute from others and i do think you get somewhat more realistic view of the likely issues that will, that will be facing the euro area. so i want to give you a little bit about the macro outlook although dave's stole a bit of my thunder on it. i want to talk a little bit about the european central bank and i want to talk about two key risks. i should say these are risks for the outlook. they're not necessarily risks to european growth where, at least the first risk the european policy consensus were in fact probably by some at least, myself included, if that were to break that would actually probably be hopeful news for european growth but it would be bad for this particular outlook. and then i want to talk a little bit the issues

related to the establishment of the european banking union. many of which actually have been accelerated greatly by the recent debacle in cyprus. but, starting with a macro outlook, in short this will be, another year of stagnation? which means that i would expect both the first and the second quarter, the recession in the euro area, to continue. and then, in the second half of the year we will see a gradual, very gradual recovery, leaving us about flat for the year. and just going a little further into the future, i don't think we can hope for even close to 1% growth for the euro area next year hire. and, but i will also say that this is not an outlook that's going to be exacerbated or made worse by european commission sanctioning of fiscally irresponsible countries.

that's not going to happen. you are instead going to have and you actually have had for quite a while i would argue, a focus on structural measures rather than the headline deficits, when european fiscal policy is being made. and this actually matters quite a lot because the way european fiscal rules should be interpreted today, i would argue is not that, you know, you can never run a deficit more than 3% or for that matter whatever the european commission deems feasible. the way it works is, it has given the european commission some more political capital. so when it gives a country a right to exceed the deficit target which it gave spain last year and give pretty much everyone that needed it this year, when it gives that permission it can extract some policy quid pro quos in return on the structural side. which, for instance, i would

wager in the case of france, while france is clearly going to exceed its deficit target this year, it will be a given a green light but also will be told to do pension reform as part of the political price for that. so, therefore, ultimately the e.u. fiscal policy framework is not in my opinion as ridge gid as many people believe and therefore also does not put politically particularly downward risks admittedlyly to the weak growth outlook. on the european central bank, in short, i think it will be, it will remain on the fence or on the sideline. it's not going to do very much despite the fact that i just rei can dicked, projected, they have in their own forecast projected a year of zero growth next year. the threshold for further rate cuts of the main policy

rate will be extremely high. zero growth, you know, below 2% headline inflation and modest median inflation expectations will not be enough in my opinion to make this change. the worry frankfurt will have is the ongoing fragmentation in the euro area. it is clear the ont program has not been sufficient to reduce the de facto differences in the financing cost of nonfinancial sectors in europe between spain, italy, when it is still four to 5% easily for a loan and close to zero in germany. and in fact, i would, as i'm going to talk about a little later, the events in cyprus and the banking union actually has the potential to make this worse. but that doesn't leave the outcome that whereas the ecb will not do anything on main policy rates, if they're going to do something, again

i would stress here that the policy threshold is high for this to happen, it will be on sort of more targeted, so-called, nonstandard measures. but again, i don't think we should expect very large new nonstandard measures because with the introduction of the omc program the ecb essentially made itself hostage to political response in the euro area. meaning they are not going to do something major, nonstandard, unless they're asked to do so by governments which will only do so when the economy turns really, really bad. so essentially, an monetary policy will revery reactionary going forward. now, onto the risks to this outlook. i think first of all it's important to understand that, you know, we may see dramatic television footage. in spain, in italy, cypriot banks collapsing, et cetera,

et cetera and you get the sense that you know what? this politicking can't continue but reality it can in my opinion and there is in my opinion no risk that the current policy of ongoing fiscal consolidation in the euro area is going to be changed in the medium term because the reality is, and i should say i'm cognizant of sharing a podium that janko stood on a few weeks ago, but reality is in the euro area at least you do not have popular protests lead to the overthrow of a government. which means you want to have a change in policies you need to look at the election calendar. if you start by hedgegy mon, germany and fiscal policy deputies, first of all in germany no matter what the election outcome is going to be it will be status quo. everything that has been

done on fiscal policy as well as the euro area rescue packages since the beginning of the crisis in germany has had 85% backing of the bundesbank. that is not going to change even if there is a surprise in the election in germany and the new chancellor is stein brook. that is number one. all the other countries on that side of the column will be the same, i would argue. similarly, among the peripheral, ingnas is will not cause collapse of the government. irish government will not change. those that say the greek coalition is about on its last leg, i say, yeah, they don't have a great situation but if you're democratic left, the two left-wing small parties in that coalition, your choice is either to face an election right now vis-a-vis the sereza party or take your chances for a greek recovery

before the elections in 2016. i would wager they will do the latter. so ultimately are you're not going to have major change among these governments either. and you know, just one last thing. francois hollande in france he is not a keynesian. he will not make, his election made zero chance, changes to the european fiscal outlook. then of course, what about italy? well, italy, someone who is a great fan of "game of thrones", i think that, studying italian politics is eneven better because the season lasts the whole year, every year. [laughter] but having said that the reality is that political instability in italy is the norm, not the, not the sort of abnormality. where we are today kind of where we've been pretty much throughout italian recent history after world war ii.

the political system in italy therefore is very robust. you know the threshold to go to technocratic government is quite low. mario monty was not very you meek -- unique experience in this case. i would argue that is my base case where we're going. the election result which i won't have time to go into, except to say it was really the big winner her was silvio berlusconi. not because he was running to be prime minister. but basically he gets to stay out of jail and remain a main political character. and i would also say that the election result places very significant question marks for grillo. has to decide he would be occupy wall street movement, ultimately longer term irrelevant or become the tea party movement and integrate in the political process with a couple key measures to make a difference. where we're going to be i don't really think is obvious yet.

of course mario monti was the big loser. he is no longer a credible center right candidate. ultimately a divided outcome but i think the prediction i would make that we're likely to have another technocratic government, which would be led by another mont-like character. my bet would be probably that person will be a woman this time because that's the way the political system in italy can signal change without really changing very much, without being very cynical about it. >> [inaudible]. >> sorry, with being. thank you, adam. with being very cynical about it. also maybe because neither berlusconi or basani is having a new election is interested in a new election this would be the outcome. what it means for italy is another issue of political continuity. monte's fiscal tightening stays in place. structural reform will not really happen.

6 if the situation changes i bet there will be majority of currently elected italian parliament to make a request to the european central bank. so again there is more of the same. then there is the issues surrounding the creation of the banking union which will not have a lot of time to go into just to say that, this is all very messy. and it actually does have, even though cyprus did not blow up the euro area banking system, it does pose a significant additional settle of issues because you are messing with a very important element of the european financial system because the reality is that most credits in the euro area remains drawn through banks. this is a chart that shows you the balance sheets of the nonfinancial sectors in the euro area since the beginning of the euro era in

1999. you can see that an entire increase in lending to the non-financial sectors in the euro area has actually come from the banks. meanwhile you've had very limited growth in the corporate bond issuance and, that means that where we're going now with more bail-ins which is something i very much support. you know you protect insure depositers. you protect taxpayers but it does come at the expense of putting additional uncertainties to this, the only channel of credit really, really important credit intermediation channel in the euro area and this matters in a lot of countries because a lot of these banks in a lot of these countries have actually relied on issuing bonds to finance loan growth. what this chart is essentially the bank bond issuance which pretty much up until cyprus in enjoyed an implicit government guaranty. 1999, the beginning of the

euro and the latest available data. you can see with the exception of germany, pretty much every country actually had very significant increases. well this is a type of capital structure, a type of lending by euro area banks that's now going to come with a significant risk premium and it's going to come at a time when corporate bond markets remain very small which of course again clearly means that the sme, smes in the euro area will be most at risk for an additional credit crunch. so, where does all this leave us with, with respect to the banking union? well basically implicit in this, in this outlook is the current implementation structure of the banking union which means supervision and resolution agreed by mid next year but certainly ongoing stresses, ongoing credit crunchs. but then, i mean this being

me, i do believe that there is actually, once as usual i should say, a chance to rescue a success from the failure because what you do have, and as i said, this is, i think a 30% chance, is actually an opportunity for a grand bargain so that the germ nance -- germans, now imposed bail-ins on bank depositers everywhere in the euro area are actually forced to therefore as a quid pro quo accept a joint deposit insurance fund for the euro area. the ecb begins more aggressively to "bias" set backed securities of loans, securitized loans from smes. and that eases the credit crunch. you have an abatement of the fragmentation. confidence is restored and as you can see here, i think we have some upside on the growth. there is adown-size --side as well which is smaller

probability. but the macroeconomic impact of that will actually be quite severe. i don't time to go into the details of it but it basically means none of the issues surrounding the euro area policymakers on the banking union are going to be resolved. that would be very bad for growth this year and equally bad for growth next year. so i will end on that pessimistic note. thank you. [applause] >> i think that was terrific. i think they all were terrific. as i asked dave and barbara to join jacob and i up on the table let me just make a couple observations to try to in best bergstrom fashion pull out the bumper stickers from their more measured remarks. i think what we have to take away from dave, as he said in sober fed speak at the end, i know mike is sitting

here and he knows how important it is was that innocuous comment, well, i used to think the risks were largely on the downside and i think now they're evenly balanced. this is like when the weather forecaster you know, says, there is zero chance of snow. this is a pretty big deal. and this is a direction which dave and i and joe and others here at institute that work on the u.s. have been leaning for a while but i think it does matter that in particular that the housing market turned and also that the sustainability of fed policy really are there. and that this is going to give an ongoing framework for growth. i think two things that dave talked about six months ago that i just want, couldn't fit into the presentation today but i don't want us to lose sight of are, dave reminded us last time and i think it bears reminding we do have this variable we don't know the full extent of the lasting labor market

damage from the recession in the u.s. we are still at a very low level of participation rate versus the past. we're a long way from filling output gap from filling employment gap. when we talk a two year horizon we got room to go. when you're thinking about the median term you have to keep in mind there may be damage it u.s. labor markets not yet, even if dave believes them, which he doesn't have it say today, are not necessarily built into this short-term forecast. turning to barbara, i think, it gives a great example of the kind of political economy work we do here which of course jacob also does trying to tell you where some of these choice points are. obviously if you look at just a cuba or even just a venezuela, the direct global gdp impact is small. but, if there's one thing that we have learned from being the home of the original washington consensus let alone watching what happens in europe as jacob points out about consensus there, those of us who suffered through

shifting central bank consensus through the years is policymakers do tend to move in heads. they do tend to move in groups. barbara may, 21st century socialist, between the 20 sir century capitalist is very telling. part of that is you have bolivarresque figure with new energy in chavez. a world in which multiple regimes are moving at the same time. then you have secondary regimes like ecuador and bolivia and cuba who were basically living off the post-soviet money coming out of venezuela instead you could see much more of a wide shift and i think one way to exaggerate responsibly barbara's position is to say, that in the next couple years you could be seeing a significant turn in that spider chart of real fatting of the left side. or putting it differently there will be a lot of trimming of socialist sails.

finally turning to jay could be, jacob of course as us a gives us inside to minds of policymakers. unfortunately i have to completely agree with him on the ecb. the omt, the promise that the ecb will intervene conditionally into government bond markets essentially boxes them in. then it means they don't want to intervene unconditionally. they have sort of limited themselves. so i think it is a very fair perspective jacob says. i think also, you really do want to listen to him as everyone here is known to listen to him and fred, anders, and nicks nicholas on the european politics that things are more stable but i have to push back one little bit. the fact that things are politically supportable or sustainable does not mean they're optimal or nice and jake, i'm not accusing jacob of saying that. we have to recognize you could have ongoing, 30, 40% youth unemployment in many countries doing lasting damage to the supply

capacity. to their future prospects. and yet, not change the current government regime. if you think about it, you have a world where this is after world war ii. we have constitutions in place in europe, specifically to keep out radical parties and keep them marginalized. we do, with the exception of greece, still have reasonably generous welfare states. we do have systems where the old people are will be voting more. but none of us should delude ourselves because it is politically stable it is nothing like a good outcome. so on that cheery note, let me open up for questions. i will come up here and direct traffic. as usual we have a traveling mic near the front. if you're near the back you can go to the standing mic to ask questions. please identify yourself.

i also like the last three or so questions come from outside guests and t not from the institute. thank you. who's first? okay. >> hi. jessica. peterson board. i'd like to ask a question about japan which is a major economy and which each of you can reflect on in different ways. of course adam may come back, back into it. i find that the, even the best of reporting on japan now is about as absurd as anything i recall seeing. you get article after article, ft and others saying this is exquisitely difficult. it is almost impossible but they must do it. and then they wave off whatever the issues are about what's happening to fiscal policy. so i would like to ask, for some remarks about what the

chances are of japan really going off the rails in the period that you're talking about through 2015. because most of the experts simply seem to be saying, this was absolutely essential even if i have's impossible. >> okay. my colleagues are looking at me. no we always look at the boss. >> this is great. all the people publicly acknowledging i'm the boss. it is very exciting. i will try to answer quickly on japan so we can focus, you're right, jessica, that was another topic we could have chosen coverage today. it is very important. japan is still the world's largest economy. if they grow at 2% instead of 1% that's big. if their bond market collapses that's huge. you're absolutely right to put that out there. in my opinion and full disclosure, i am in contact with the prime minister's office and cabinet office in japan. i'm a fan of the his

economics which is probably clear. i think they do have a difficult path to navigate but the issue is less cosmic somehow than the reporters make it. and therefore it is a little more trackable. i understand what you're saying about the divide between rhetoric and reality so let me put it bluntly. we had the abenomics event here with the professors. there are three pegs to abenomics. one is the monetary peg, one is the structural reform peg and one is a fiscal peg. the monetary peg we can talk about another time, full steam ahead. god love them. i think they're going to do it and they will make a material difference to prices. that is going to help. structural reform hope springs eternal. arthur alexander and others can comment about this. through efforts of jeff schott in the room, barbara's work on tpp, me and other folks, but mostly because they get it the ab

e-government signed up for tpp that is the best path for them to doing structural reform of doing anything they have done. for the government to do that ahead of the upper house election says they do mean business. they will whine about rice and all that. we get it but it is meaningful. then there is the fiscal question. the trick is enormously harmful to markets, fiscal outlook even if they have growth if they do not raise the consumption tax in 2014, 2015, the national vat as they promised they will do. so much brad has been spilt for that and the only way they get the fiscal path onto a sustainable path. they have to do that. but, they learned a lesson of '97. they now admit if they do raise the consumption tax of 5% in a year it probably does slow the economy a little. and so the government forecasts now admit if you look at them talk about two plus percent growth rate

2013 and close to zero in 2014. there are a number of people, mostly problem meant people in japan, people like me or for that matter marti feldstein, who said you might want to smooth that a little. cut off the recovery. so yes, do the permanent consumption tax rise but try to think about a temporary investment tax cut, a temporary rebate on income tax, just to smooth the path. and they have enough room to do that. i'm quite confident they have enough fiscal room to do that the place where the drama happens is two fold. first, if they just for political reasons despite the prime minister and the new government's strength still wan to persist in the same old public works spending pandering they have always done instead of doing this temporary tax cut they may get zero bang for the buck and just miss the opportunity. the second is, they have got this narrow window where i fear, this is me doing politics which i don't do as well frankly as barbara does

latin america or jacob does europe but i have a fear that if the abe government and boj efforts combined don't lead to a multiyear recovery, everybody says, okay, that really is a game over. whether literally on the numbers it is game over or not, that becomes self-fulfilling. so, when you say, what's going to happen to the japanese bond market and 2015 i think short term boj will make a material difference, yield curve will flatten and lower things will get better. nominal yields will go up, real yields will go down down. the question do you get enough growth by 2015 to make that sustainable or not. sorry? >> gentleman in the back and then. >> gentleman at the back and mark at the front table. >> hi, i'm from the wilson center. i wanted to, i'm curious about your assessment of the domestic factors in the u.s.

and in the european union that may impact this proposed negotiation of a trade agreement between the two areas. how do you see it right now? are you optimistic about the chances of that agreement and what would be a its impact? overall in the economy of both regions? >> just to be fair, full disclosure, barbara can talk about that and jacob can talk about that i will probably not put dave on the line for that. i will point out that jeff schott has policy brief that just came out, just came out, looking at this issue and which i commend to all of you and we'll be doing more events related to that. but, barba, do you want to say something about how you see domestic politics going on no longer taf at that. -- tafta. >> domestic politics at this point look positive going

for the ttip. there are sticky issues in the any eu-u.s. negotiation as there are in the trans-pacific partnership. rhetorically there is strong support on both sides witnessed by the german buzz that goes through washington that has ttip on it. that is great. consumer education for that, will pass it to jacob. >> no. i mean, very quickly i think, policy support for this is quite stronger where in europe, especially in germany. that actually matters quite a bit in my opinion for domestic, quote, unquote, european politics for this because first of all, germany, nothing happens in europe unless germany wants it but germany really wants it which means they would be willing to pay for it, which means that there's actually, in my opinion quite a lot of opportunities for other euro area countries, before we start the negotiations with

the united states, to actually put together some sensible changes to euro area political institutions. you know, we've already had a mf globallization fund run by the european commission. you could equally demand from fund be resurrected, indeed expanded quite a bit and used for purposes similar to what we know as trade adjustment assistance here in the united states. i don't think that is something, that is a way to basically tap into, you know, german fiscal reserves if you like as part of this deal. domestically in europe. so no, it matters and i also don't think that indeed the fact that you have a french socialist president who is less beholden to agricultural interests than his center right predecessors is probably

also a good idea and the overall, shall we say, centrists shift of the, the mediterranean center left parties i think again begs well for this, from the european side. >> yeah, just to emphasize that we've got some very good work on this and ongoing and we'll be doing more with it. we're hoping to have an event with jeff and with some of the actual negotiators in coming weeks. i believe you're next, mark. >> mark finley with bp. adam, thanks to you and your colleagues for another great event of the my question is, what does this world view mean for exchange rates and how does the ongoing discussion around currency wars or efforts to stimulate domestic demand play into that? >> how nice of you to ask that. i'm actually going to let dave take that. i will just make a

programming note. i hope, you were doing this consciously. we're going to have a potentially ground-breaking conference tomorrow from 9:00 a.m. to 2:00 p.m. in this very room on currency manipulation, currency wars, trade retaliation, legal implications. this is done under the leadership of joe ganion, who has been doing very interesting important work on currency manipulation. obviously fred will be putting his aura on this as well. we have a distinguished legal panel including gary who have bauer and mike ga d/b/a ugh talking about legal implications to the wto i will chair the lunch panel with the deputy governor of the bank of canada, the deputy governor of the bank of brazil. and ben of the ecb and as well as our own robert zoellick talking about the tensions in the currency field. this is the place to just

come spend a day tomorrow as well as today. but leaving that aside, where do you see the currency wars playing in this forecast, dave? >> basically i would expect, you know, the dollar maybe to firm somewhat over the first half, 3/4 of this year but then move sideways in nominal terms, given inflation differentials. probably some decline in the real dollar over the course of the next three years. that's part of what is providing as i indicated in 2014, 2015, a little bit of an upward impetus from external, from the external second, to. some of that is pickup in activity and some of that's small decline in the real value of the dollar. but, i'm not really anticipating any sharp or marked movement in the overall broad real dollar at this point. >> jacob. >> though i guess i don't disagree with dave at all. i just i guess to the extent if we believe that, you know,

foreign exchange markets really take all their cues from policymakers today and they don't really care about economic fundamentals, rather than they only care about what policymakers say, well if that world view is true, which i think is doubtful but in that, in that sense i would expect the european train central bank to be the least willing. they will keep sitting on the fence. they will not do major qe despite the bank of england and fed continuing. ironically their fear, because the fear of exit problems for them is so high, it is going to be, prevent them from getting in really in the first place to some extent leaving aside the obvious. this is also not going to happen right in the midst of an of a german election campaign. >> i guess just to restate it slightly differently from my point of view, i think monetary decisions are not going to be primarily driven by exchange rates, even in

japan. they have already gotten the depreciation. they have locked it in and the ecb for the reasons jacob said is not going to be sacrificing other goals for exchange rate goals. obviously some smaller countries may and the question is whether the switzerlands and hong kongs and brazils and turkeys and how that plays out. that is subject we'll discuss tomorrow. i guess the thing to pick up on the exit point, there is going to be a premium on sort of reverse musical chairs. no one is going to want to be the first to tighten. even though it probably means good news that your economy is recovering faster than everybody else, no one will want to be the first to tighten because that will probably have at least a big short-term exchange rate impact and that may come back to bite us in a minor way. >> someone in the back. . .

instead of reminding people nonasia. it you're standing next to nick who will give you a summary quickly. i'll give you my distilled version of the summary, which is as nick have articulated supposedly published through us, there's a path that the chinese new regime can follow in the

self-interest rebalancing. it's reasonably consistent with the stated priority. it involves some measure of financial liberalization, and that it's doable in scale and the very interesting example of way to wan -- taiwan moving to have a more balanced economy. that's fair. therefore that's why just the feature how we do this does really touch base with the regional experts. when we put in that bullet point about 8.5. that's because it would be nick's assessment of average worth of trends in the next few years. yeah? >> richard. >> rich, elite management. can you talk about brazil and brazil seems to be, like, the important swing country between the 21st century socialist and capitalist. where do you think brazil is

going and the impact what happens with brazil on the other countries on both sides of that. >> thank you. i think that's a appropriate characteristickization for those -- characterization between those the 21st socialist and century. brazil is more pragmatic but emphasized some of the aspect of the 21st century socialists have social spending, somewhat more protection is less protection than argentina. in term of trade protection is currently the winner in latin america, i think the eighth, you know, top pretech or it in the world. -- pretecter in the world. pray -- brazil has obviously slowed down in growth whether you think it's structure or hang over from the boom time in the mid 2000 that the government said. there are things brazil needs to do. the press picked up on this, you know, brazil being no longer the country of yesterday but now the

country of tomorrow. but the country of today and now is brazil the country of yesterday. i think that's unfair in the comparison with mexico. i do think that there's a fair comparison with mexico is that brazil has some of the same microeconomic challenges that mexico is currently addressing. perhaps some of mexico's difficult but important reforms will. help with brazil undertaking politically challenging reform. obviously, education is a challenge. another challenge is infrastructure. and a real problem in brazil is still the bra still began cost -- brazilian cost even companies that invested while brazil has been growing and brazil is wonderful, you know, internal market. of course, you know, there's the fight brazil the sixth largest

or the seventh largest economy. i think that's immaterial. there's a large cost of doing business in brazil. it brings down brazil in the competitiveness. it's not an easy fix. it's not a matter of tweaking a mark microavailable. i think say it's the time for brazil to take a look at that. take a look at the position in the openness. brazil is not a very open economy. when you look at what the countries that are growing in the 21st century capitalists basket are doing, they're looking asia, they are trying to harm monoize the trade agreement, trying to eliminate the barrier or the cost that are keeping them from participating fully in gloacial -- global supply chains. brazil is focusing more on south

america. that's probably keeping brazil back. >> we, again, because such a rich world out there. barbara, as you saw really coffers brazil. we chose to emphasize the more swing story not -- brazil is a swing state but a sense more likely to see a change in the short term. just if i can ask you brash bra draw you one step further. in line with what you were saying a minute ago characterizing brazil on openness the little green line said where they were almost most -- i don't want to say backwards, most antimarket was in term of international investment policy. maybe i'm wrong about that. but that the investment freedom they were doing poorly. can you say a little more about in the current political situation brazil, the post world. what is the ideological.

how do you see the investment issue in brazil? >> i think the good market e fresh sei was lower than the investment freedom. but that also impacts investment. we talked to companies who want to increase their investment in brazil, and seem to be in line with brazil's policy of trying to promote higher tech, higher value-added development. which makes sense. but then they impose the tariff that make it difficult for the companies to -- brings up the cost for them of production, bringing up the cost of investing. and increases the cost of consumers which inflation in brazil is pretty much hitting the upper bound of the target which is about 6.5%, which also -- so i think investment, yes, in term of the limit on some of the, you know, capital taxes.

i'd say that probably taxation, as i should have included on efficient tax mechanism, of course that gets kind of complicated. i think in term of the good market control, that's probably just as important. >> thank you for clarifying that priority. anyone else? internal questions. [inaudible] yeah you do, go to the back. [laughter] >> go to the back. >> do not pass go. do not collect $200. [laughter] >> this is a question -- [inaudible] you said that the will be a trigger for that. could you elaborate on that? does it mean they are not telling how to know or do you think that by the time we get there, they will become --

[inaudible] or political pressure or become -- why do you think these two things will get together? >> i should qualify my assertion. so i'm thinking it's going closer to a trigger than a threshold because the unemployment rate is going to be a steady downturn. they are looking ahead. they'll be uncertain about the unemployment or -- to be hitting that point with growth above potential and down trend on the unemployment rate and looking ahead. i'm thinking that when they actually get to 6.5 they'll use that opportunity quickly to at least do the initial increase and the funds. right now wrong. we're approaching it at as a shallow trajectory. i can see that being a threshold than a trigger and the fed deciding to be a little bit more

relaxed about the unemployment rate. wanting to make sure that the improvement they have seen is going to be sustainable. i don't they're deliberating attempting to mislead us. it's more of a forecast about how they'll approach 6.5% unemployment than a matter of fed communications being sort of attempting the talk down interest rates when they don't really need it. i think they have been pretty -- they have been reasonably clear about that. that's sort of my view on that particular issue. >> thank you, dave. thank you. anyone else? if we beat you in to submission of the master of the entire world? no. i see a gentleman there. give him the microphone. [laughter] >> hello, my name is jose po lee i wanted to ask there's a lot of

talk between the u.s. and the e.u. european unit union. do you think they'll open now that the two most powerful economic forces might expand their trade? >> that's an interesting question. i think that whether the ttip could cause treasure on the 21st century socialist -- i would say in the short term that probably wouldn't be the force that i would be looking at for changes in economic policy. most of these countries have strong relationship with the u.s. and e.u. but aren't actively engaged in trade negotiations and don't have preferential trade

negotiations trade agreement with either of those countries. and so unless you see a lot of trade diversion as a result of the ttip, which given the commodity exports status of most of the country is unlikely. i don't think it would be a pressure point. it's an interesting thing to think about. they don't seem to be swayed by other trade agreements going on the ttp or other countries entering to a free trade agreements with the united states, you know, in some cases in case of venezuela that caused them to take sort of more inward actions abandoning the community, for example, which included colombia which signed a free trade agreement with the united and becoming a full member. ting caused complications for them. which is in negotiation with the

e.u., but has been since the early 2000s without really a lot of movement there. now if it causes the e.u. negotiations to accelerate and something to actually happen there. that would be exciting. >> yeah. that would be or competitive liberalization in action. [laughter] ted truman. >> so one comment and a question and a half. the comment is -- you touched on you adam indirectly about the first move in monetary policy whenever it comes in general in the world. i will agree. not likely see right away. i'm not sure that history actually completely bears you out, adam. that will produce a big surge in the economy and the exchange rate of that country. the lesson of 1994, which is what what everybody is talking

about. how to went down in the period. it was substantially. it had something to do with the beginning of the clinton administration and -- [inaudible] punitive straightforward with japan. it was a classic example where exchange rate didn't follow interest rates. it -- the criticism. what is how do do we put it together? so the united states is doing a bit better, dave tells us. europe is going to be where it has been for the next 18 months, anyhow, latin america is going to be somewhat nixed. not much better. so and developing country as other developing countries will be mixed bag. we're looking for maybe a little more growth this year than last year in the world as a whole. but decidedly sub par.

it's a question of looking for conformation in term of take away. it has some -- this is the half question that does have some implications for -- you want to put the other side of the currency or question like whether how many countries will go the route of active appreciation and currency and trying to get it out. i think it's difficult for any of the major currency -- any major countries including now japan to actively, meaning sell the domestic currency and the foreign exchange market to do so. i don't see in the uk or the united doing it. obviously the fed would like them to do. i would be interested in any comments on that. dave, do you want to cothe summing up?

>> [inaudible] i think the central bank story that central banks major central banks story are pursuing domestic objective with expansion their monetary policy in fact what is proceeding. it's not principally organized around an effort to have a competitive evaluation. i think they must recognize that's not necessarily even possible. but as you point out, the global economy certainly the major advanced economy are all so weak i think this application of expansion rate policy maybe not so -- as jacob noted but certainly in the united states i think we'll see more in the united kingdom. we are already seeing bank of japan more active discussions.

and this is both -- it's necessary in the current setting. to some extend central banks have been placed in a position that obviously they're uncomfortable with. they didn't ask for. but they have got it. that is despite the fact that major central bank have lost some credibility over the last five or six years in the wake of the financial crisis. they are still the most credible policy game in town in almost all of these countries certainly relative to the fiscal authorities. and it would be great if we scrolled a different mix of policies across the economies that put office -- on the fear

when the time comes. twailg i -- actually i doubt the fed is going to be too deterred by a fear especially of a currency. they'll take that in to account. they'll be more fearful about there's going to be bumps in the road when the tightening begins. there are vulnerabilities that the fed doesn't see that will crop up. it will not be a smooth process. i think when the time comes, they'll be looking at domestic circumstances and they'll take the plunge that might do so slowly to sort of test the water. one difference between 1994, and what will experience sometime in 2014, '15, '16 is gee, the fed didn't tell the market or public anything about the policy intentions back then. we just did it. i think there now will be an attempt to -- with a more active

communication policy prepare the market for the time comes. that will not -- all of the financial vulnerability. it will certainly help. >> thank you so much. >> thank you for joining us. i hope you join us tomorrow or by web casting. either live or by web casting for tomorrow's currency conference. i hope you'll mark the calendar for roughly six months when dave and another pair of senior fellows will give you the global economic prospect from the peterson institute. we'll seal you many times in between. the meeting is adjourned. [applause] coming up live this afternoon remarks by former treasury secretary hank paulson.

speaking about u.s.-china economic and environmental challenges at george washington university. that gets underwayed at 4:30 eastern. and secretary of john kerry. the two will speak with reporters with the state department after the meeting. which will live on c-span at 4:30 eastern. all this week here on c-span2, we're featuring booktv in prime time. tonight "life in combat" beginning at 8:00 p.m. eastern. lesson i learned in a combat hospital. at 9:00 from the tucson festival of book howard author of "seal team six." and brandon web author of "red circle "my life and how i trained america's deadliest marksman. later at 10:00 a panel including jack tapper. "the outpost."

booktv each night in prime time this week here on c-span2. we have to take back media. independent media is what will save us. the media are the most powerful institutions on earth. more powerful than any bomb, more powerful than any missile. it's an idea that explodes on to the scene. but it doesn't happen when it is contained by that box that tv screen that we all gaze at for so many hours a week. we need to be able to hear people speaking for themselves outside the box. we can't afford the status quo anymore. from global worrying to global warming. >> author, host, and executive producer of "democracy now" app my -- amy goodman taking your calls, facebook comments, and

tweets. three hours live on c-span2 on sunday. officials from the obama and romney 2012 campaigns sat down for a discussion about fundraising. they spoke about the record amount of money raises, the cig cansz of online donation, and the influence of super pack. we'll show you as much as we can before live coverage of former treasury secretary hank paulson at 4:30. [applause] >> thank you. and thanks everybody for coming. it's an exciting deal to have an substitute of politics at the university of chicago as a chicago native. i'm just thrilled by this and thrilled to be able to take part in it. and i wanted to start out tonight with a quote from a man named mark hannah, who lived and

was important more than 100 years ago. he was william mckinley's campaign manager in the election of 1896, which had a lot in common with 2012, as i'm going to mention in my -- book. it and hannah said there are three essential things in american politics: money and i can't remember what the other two are. [laughter] so. and hannah went tornado all of the heads of the largest corporations in america in 1896 and got them all to make major donations to a mckinley campaign including cyrus mccormack who had the company based here in

chicago mccorp. make reaper. and he just blew out william jennings bryan, the boy orator from nebraska who was the populist and that year the democratic party candidate. this time around, 2012, money raised was a lot more even. and contrary to a lot of expectations, we'll get in to it. i want to just kind of start out with some basic facts before we start our discussion. let start with you, spencer, how much did you raise all together, and how much are of that was used for television and for field organization and some of the other important functions of

a campaign? >> well, thank you, jonathan. let me start by saying thank you to everyone at the substitute of politics. david, thank you for hosting me here and allowing me to be here. coming from boston and the romney campaign. i got an invitation to come to chicago and come to the substitute of politics and sort plaza and say i wonder how i'm going to be met at the institute of politics and president obama's book yard. i have to compliment everyone here at the institute of politics for the way you have welcomed not just me, but other members of the romney campaign. sew thank you for allowing conversations like this to take place where we can look beyond the partisan nature of politics and have a real conversation about political campaigns and what is happening. to answer your question, jonathan, we raised just under $950 million for the romney campaign. that includes money that was raised, of course, in the

primary. that we raised and spent in the primary. about $100 until. we weren't able to use in the general election. you look at the overall spending of the romney campaign, about two-thirds of it went in to advertising of some kind whether it was web advertising or tv advertising. and the other sort of largest line item was other than get out to vote political apparatus. whether it was down to the digital team, through the political field organization. those are two biggest line item. we raised the money and the political strategieses spend the money. and there was a healthy debate as every campaign strategies know and every budget committee meeting about trying to forecast how much is going to be raised and where it's spent. we tried to limit as much as possible the overhead of the campaign. and try to maximize every dollar going to turn out the vote.

we're not always successful in doing that. but about two-thirds goes in to advertising. >> julianna, you guyed had the first billion dollar campaign is that right? >> we ult -- ultimately raised $1.1 billion. it was exciting. we were the billion when we hit the billion we're like oh my god, we never thought we would get there. but, you know, as far as the spending goes, it's money that -- same issues on your side too. push and pull between the raising and the spending. but we -- as everybody knows, had a huge gop effort and we spent significantly on that. we spent significantly on tv too. i don't know what the breakdown is exactly. >> i think it's closer or less on tv? >> it's a little less on tv. for the fight. [laughter] >> you probably know the breakdown. it was less just for the record? >> yes. [inaudible]

>> than the two-thirds. >> yeah. >> maybe in the q & a we get do you address that a little bit. so there was at love publicity about the billion-dollar goal early on in 2011, and people on the campaign were telling me, no, no, no we'll never raise a billion dollars. it's too bad that leaked out. it's not really in the cards. that's a ridiculously high number. so why other than the fact that people like the president -- what was the -- how did you split the at tom on online fundraising and the other things that got you up over a billion dollars? >> well, i mean, we started out like we did in the '07 and '08 raise. -- race.

we did a lot of fundraising which is usually comprised of ercht with the president. those tend to be the higher ticket items, and people want to come get the photograph taken, you know, with the president or the first lady or david l -- axelrod. we did a number of events like that. we did online fundraising. it laisk ily kicked in the last half of 2012. which makes it a little bit difficult to budget. we sort of knew we raised $880 million in the '07-'08 campaign including the dnc. we thought we could get close what we had before we raised then. that's how we budgeted. >> you didn't have the same allegiance from dot nor base, you know, a lot of people on wall street would have been with the obama exain in 2008 peeled off. your early events for a little

bit underwhelming in 2011. you were quite behind the eight ball. you weren't doing as well as you anticipated. what changed? >> i think we set goals and reached the goals. there were no events that we didn't reach our goal. so in that case, we were very satisfied with the money we were raising. it was harder this time just when we had had 3 million donors in the '07 and '08 race. we ended up with 4.5 on this campaign and 1.9 them of -- no -- 2.9 were new to the campaign. we had a lot of new excitement and people joining the campaign. i don't think it's a lot of folks weren't excited, it was just different. we didn't have the primary or the events, if you will. leading up that were just covered in the press. we had to create our own event. so, you know, going a dinner out in los angeles, that's not going

get press coverage nor should it, you know, if there's a debate somewhere, then that would get coverage. with we were able to have the excitement with the president and the hillary and john edwards and chris scott during that time. >> john edwards -- [inaudible] [laughter] >> yes. >> so 2.9 billion new donors. these are people who they had had gone all the way through 2008 and hadn't given dispart-time the excitement. who were the people and where did you find them? >> we did a lot of online -- a lot of online advertising. found a new online contributors. we, you know, talked to a lot of new donors that could give at the higher level. a lot of new bunked leer and people that thought the great job the president was doing and wanted to be a part of the campaign. for whatever reason they hadn't been involved in the last. >> what was your break down between the percentage who gave over $100 and under or $250, if

you want to measure that way. >> the average contribution by the time all and said was done was e6d which was amazing. about 97 percent was under $250. >> okay. this is not really a question you probably want to answer, spencer. how about for you guys? >> didn't quite look like that. the obama campaign had more new donors in 2012 than we had total. just to put that in perspective. we had about 2 million donors and 4 million contributions over the course of the campaign. so about half the number of donors. when we started, we recognized that we had a to go through the primary process. there wouldn't be a lot of online excitement. you kept trying to build an online fundraising community in the primary was an uphill

battle. people are not general public isn't paying attention to the race in the primary. we knew it would come later. we were asked in every fundraising meeting early on. when will you be able to raise money the way the obamacare does by getting millions of small donors. we were running against gingrich and santorum and trying to convince the supporters it's not going to -- it will happen at some point. no to the measure of the obama campaign, but and it did happen later on. only we to build a fundraising strategy based on a high dollar approach. individuals that would give in the primary $1,000s plus. so our structure that we put together was based on people that can go out and raise in $25 00 increment or $100-increment. $50,000, $100,000, or $250,000. it was a much smaller group of people writing and raising

larger amount of money than the obama campaign. >> can you give us a little bit idea how much smaller. which percentage gave less than $250? >> i'll give you a couple of these i'm sorry to read them. this is now looking for the course of the entire campaign. starting with the highest level of individuals who were responsible for a $1 million. we had over 100 people on the campaign who were responsible for $1 million. [inaudible] >> in terms of giving, we had what we called our founding moip and the founding partnership. individuals and we looked at the giving guideline from giving limit for the republican party. there always these strange numbers. $23,322. we have to get rid of that. $50,000 and $100,000 as a

couple. so we market $50,000 founding moip. we raised $100 million from couples that gave $50,000. we raised 0eu8d million from people who gave $100,000 as a couple. so fifty and hundred. you are close to $200 million from people writing a $150,000 check. let's see, the -- or club mid program, reraised about $50 million from individuals who gave $25 00. you can see where i'm going as you look at the numbers overwhelm belie. well over 50% of the money more like 70% came through the high dollar program. it wasn't until the very last three months of the campaign where we started to see large amounts of money coming in over the internet. average size contribution toward the end of the campaign would have been over $1,000 mark.

it's different in '66. right. [laughter] >> right. so there was a time , i mean, you were enormously successful with this. much more successful and sense or so was -- spencer was one of the stars of the company for those of us who were following all of us. you were enormously successful. was there a point when you released you know what? by getting all of these small donors, obama is turning them to volunteers and getting buy in from average people who are giving a little as $3 with the original ads with the obama people. >> yep. >> and they are turning their small donors in to people who can help with go tv and other part of the campaign. that's a weapon we don't have. did you confront it? >> we did. we thought about it. it wasn't something that we pretended didn't exist. we knew that every time the

obama campaign got someone to write a check for $2. the individual will follow the investment and turn out to vote. they were going be there as a volunteer. it wasn't that we didn't want that, it's just that's not what we can get the money. and, you know, why do you rob banks? that's where the money is. my job is to raise money. and we, you know, we originally thought we would raise -- we set a goal of $500 million. that's what we said, okay, question raise $500 million based on what john mccain george bush did. we heard the incredible number from the obama campaign they were going raise a billion dollars. we said dishow we do that? we believed it. and sure enough, they delivered. they delivered a billion collars. so we very quickly changed the structure how we were going get a billion dollars. and became very close. we ran it like a business. every state every region had state chairs, city chairs, our

finance operation is probably the closest thing to the, you know, i don't want to compare to the obama political machine. that's a, you know, a whole another stratosphere. in terms what we did on the finance side, holding people accountable -- we fired volunteers, for instance. that weren't hitting their goals. [laughter] but so you to do that. if you're going hold people to a standard and say these are the goals and the them rick. we measure them every single day. if it wasn't working, we tried something different. i think that's the reason we were able to come as close as we did on the money side. >> did some of them work on commission? >> i'm talking about the volunteer. these are volunteer. >> you're professional. >> no. we -- that is a good question because in previous campaigns many of the individuals the consult assistants in various places work on a commission

structure. we changed that. we set a high goal, we said we can raise hundreds of millions of dollars, and here's what it means for you and los angeles, yale. every market we had a state share that was ultimately responsible. that state chair is a volunteer individual able to hire, fire, or promote the staff, that -- within that reach. the staff were not paid on a commission. they were paid a fee if they were a consult assistant. if they were an employee they were paid as employee. and given a bonus on hitting certain goals. >> let's talk about subgroups a little bit. wall street. any sense of how much money you raised from wall street all together? >> a lot. [laughter] >> i think that's right. [laughter] >> we were fortunate to i think get a lot of people from wall street who had been previous donors to the obama campaign in 2008, or to the clinton with

campaign in 2008. and if you look at what we did in new york in the primary of 2008 versus what we did in the primary of 2012 comparing primary to primary. our new york number was up by 85 rnt. if you look at wall street, i would say overwhelmingly those individuals gave money or voted for barack obama or hillary clinton in 2008. >> wow. >> we had meetings with folks in new york who could a little survey and without telling us who they voted for in the primary in the democratic side. it was clear the overwhelming majority voted to give money to one of the democratic candidates. they said we're not doing this time grp it must have been scary for you. >> it was really scary. it was. you know, we heard the chatter from the new york folks. we staffed in new york. we had a small office there. they were a little nervous. the great thing we were able to

find new dollars in different communities. the lgbt community able to find new donors in that community. women, you know, women came out in droves for the president this time. and they gave their checkbook too. >> wall street any idea what percentage of your total money came from wall street? >> well, to take new york city is probably the closest we can -- tbleak down. more than 15% of the money from the entire country came from new york city. >> uh-huh. >> and how about you guys? any sense of how much came from wall street? >> you know, we tried to do that. it was substantially less than what we did before. but it was not . >> you measured everything, julianna. in your campaign. >> i don't know what you're

talking about. [laughter] >> everything. so can you -- [inaudible conversations] >> did really tbhel new york. if you look at it it might have been, you know, the couple one may have worked on -- we might have gotten a check from the other. >> sometimes you get one from the wife and maybe the husband would be -- since it was a gender gap. the husband giving to romney. >> possibly. >> and the wife to obama. was there some of that? >> probably some of that. i don't know we didn't really look at that. >> probably. >> we would see that from time to time in places like new york and l.a. and boston. that would definitely be the case. remember, as julianna said, a lot of fundraising at the high dollar level is event room. it means that the candidate or the president shows up to a market and they have an event. that's what drives a lot of the excitement in the money raising. when the sitting president of the united states shows up in my

market. i don't care where it is. it's going to be expiement and people will may otherwise not be inclined to write a check without an event get very excited about that. >> the president was doing as many as six a day. >> question a lot. >> do you know how much he did all together? >> i don't know the answer to that. it's a lot throw. more than we've done in the past. but, you know, the difference is '08 and 2012, you know, he was a sitting president. we had, you know, the secret service. we had to take there restrictions where we would do event which could limit the space the number of people we could raise from. even as fundraisers we wanted to add twenty people to maximum space restrisheses. we weren't allowed to see that. it was a different. we had do more events. >> yeah.

after the gay marriage announcement, did you see donationings from the lgbt community just spike? did you see it? >> well, we had folks that were trying to figure out on the calendar when they can do event that host fundraisers. we had several calls that day coming in. i think i can do it next month if it works for the president or vice president biden. it kind of ownershipped up a lot of events. people were ready to actually make the commitment and dot event. >> spencer, how about in the mormon community? how big of a deal was that? any rough idea what percentage of your money came from them? >> throughout the campaign, no. it was a bigger part of the fundraising in 2008 in the primary. to be honest, it became -- we raised records amount of money in places like salt lake city, utah in the primary of 2008.

we actually raised more in the primary in '08 in utah than in 2012. there was an evening out of the support. it wasn't just from, you know, you start a fund raids campaign. you start with people who the candidates tend to know has a long standing relationship with. we started with people that governor romney had known for many years from his church, from his business and private sec -- ebbing fip from the boston community. that was different evens out over time. >> while we're on the subject, spencer comes from mormon royalty. and his father -- correct me if i'm wrong. your family dates back to joseph smith. you were in the original group of inner core of the original mormon. and your father is one of the most important people in the mormon church. >> i don't date quite back that

far. actually, my grandfather joined the mormon church when he was 17 years old. >> okay. i don't know why i -- in any event your father is a, you know, -- i'm glad you corrected me on the history. this part is correct is one of the senior . >> he is. >> officials in the mormon church. >> he is. >> so were you surprised that there was not more discrimination against mitt romney based on his faith than turned out to be? quite a number of evangelical told pollsters they just could not vote for a mormon under any circumstances then they did. was that a surprise? >> not so much a surprise they voted for him because we knew they weren't going turn out and

work for president obama. the question is were they actually going mobilize for mitt romney? so we weren't worried they were going to leave the republican party and go help president obama. but, you know, it's something you deal with. we talked a lot more about it in the primary than the general election. governor romney was still a mormon when he became the governor of montana. so people say, well, you know, this is going to be a big problem in the general election. they said, remember, it's a guy that is a mormon millionaire who won for governor in massachusetts. i don't think -- we never saw it as a problem in the general population. it was something we talked about much more in the primary than the general. >> did it hurt him in the primary. think he might have rap wrapped it up earlier if he hadn't been a mormon. >> i think the running in 2008 paveed the way for him in 2012. the questions we got in 2008

didn't exist in large measure in 2012. >> okay. let's talk about the online dimension of this. julianna, why don't you talk about a little bit about the quick donate button and the, you know, the drunk donating. like drunk texting where things would go wrong for the campaign, you know, people would just donate. >> buy a bunch of t-shirt and wonder. [laughter] >> right. was that that big of a deal quick donate? >> no. it was a big deal in the, you know, when we were able to get it happening. it was a huge help for most people for the majority of people -- folks. there was times where people said i don't want 400, you know, ten obama t-shirt i ordered.

i don't recall ordering them. we would send it back. it did help. even when you jop online. it's great when do you go to the same site twice and it auto bills everything. that was great to be able to have that. and also we came up i don't know if you guys use it that much. remember the texting to the donate. why >> yes. >> we raised about a million with that once that got approved a. it was a quick way to for folks to give. i would imagine. >> i heard it was more than that on the phone. >> about a billion in our campaign. i don't know how much in your yours. >> it was late in the campaign with you finally got approved when you could do. it cell phone providers and didn't the president to happen. there was -- i know there was a big push to try to get it done early on in the campaign. i can't remember when it was. but it was late in the campaign when that fund was approved. >> julianna, can you talk about the famous e-mail that the

headline of which "i will be outspent from the president" which was tested over and over again and eventually started yielding -- i think it was $12 million on the one e-mail, and how kind of cracking the code on online fundraising helped. >> sure. well, you know, the online community is andy verse community, as we all know. we are all part of it too. it was hard to get folks who have the lives -- leading lives canceling with every day things to pay attention online. every time i met somebody you're like julianna smoot. i get your e-mail. i'm like sorry or thank you. we knew it would work. when the super pac would get a contribution, you know, there would be a panic. we have got this. we have a lot of people.

and we just need to get them to give and give. let's keep trying. let keep trying. and ultimately be people paid attention. oh no, that could outraise us and in jeopardy of losing the election. it was a matter of doing it over and over again. and different thing. >> it worked better when things were going badly. >> exactly. >> so after the 47%, your fundraising went down. >> a little bit, yeah. >> and how important was it to get over the fear of being on house use and annoying with the e-mails that people complained about? did you end up finding. >> when i people meet, like i said. >> the more you sent out -- you couldn't be too on house you. >> no. it someone called and complain i got the same e-mail four times. we would look and say you have a

g-mail account, a hot mail account. we would try to help people annoyed by it. you had to send out the e-mail to get the money online. >> can did you ever figure maybe we should send more e-mail. i know, you started with the $3 ask also which became popular. >> yep. >> but did you ever notice that you could not be too obnoxious? >> yeah, our digital team was constantly sending out e-mails and constantly soliciting online. you try to be creative in how you solicit, whether that's, you know, a contest of some kind. so it's not just another e-mail from the campaign. >> it's going to fenway park with the candidate. >> yeah. again, the you look at how we raised our money with the romney campaign, the focus on the

finance shop was on the high-dollar community. people may say, well, that was a mistake. you shouldn't have cone that. we tried to get creative in how the leadership team would solicit funds. we provided e-mail, template, they didn't come from the campaign, they came from individuals. if you're state chair of illinois or market chair for los angeles, then you began to send out solicitation e-mails as opposed to coming from national campaign. that tended to work well. >> that's interesting. nay would send the business associates. >> yes. >> you know, and that in some ways be more influential than coming from somebody in boston. >> we also created toward the middle of the general election something called the vertical market program. we ended up raising about $65 million doing this. and we realized that governor romney's time was at the premium. he would travel to chicago, we can do an event with the

community here where if he traveled to dallas. we do an event there. we had him in boston for a period or in d.c. or whenever for an extended period. we created vertical market fundraisers. we would contact industry leaders from whether it's the insurance base or the financial services or pick an industry and try to find an united issue around the industry leaders when we support it and we used an e-mail from one of those industry leaders saying come and support this event. those were fantastic. that was basically a $65 million gift. because we had ceo and other industry leaders trying to leverage other people from within their industry. and so they when someone that is an industry leader in by industry sends me an e-mail rather than the campaign

headquarter i'm more inclined to respond and show up. speck tick might say those folk were encouraged to get in and buy favor if romney was elected. how would you respond that? you can certainly say that that about every single dollar. if that's why someone gives. i think they'll be sorely disappointed when they . >> well, what level do they have to give where they have access. if you give e6d you're not getting access until you win the lottery to have din we are the president or something like that. but you know what level did the romney campaign can you get an audience with the candidate? >> well, the toward the end of the campaign there was not audience with the candidate. you would show up and do event. there was no events with less than several hundred people sitting there. it wasn't exactly a one on one audience with the candidates. but we would use issues that were important that industry,

and encourage a leader in that industry to bring others in. because of two or three issues based on governor romney stood on the issue versus president obama. and so you would use issues broad issue as opposed to detailed policy. andlet talk about super pac. it was my understanding that you guys liked your smaller super pac that wasn't yours but that bill burr ton, who used to work in the white house was doing on behalf of the president. you kind of liked what he was getting defense attorney. but in boston. not so much. you weren't thrilled with weren't feeling like the super pac spending was getting the money's worth.

i remember many meeting we go in the morning and say the new super pac. that's an uncomfortable place to be. there's a group out there running an ad they had no communication with you and they can be going down a road that we have no interest in talking about and so there's always an element of surprise. >> ease specially when there are a bunch of them. you guys had one. >> right. right. >> and we had -- [inaudible] they weren't on the same page at all. it wasn't good for the message. >> toward the end they figured out they ought csh i think they read too much. they realized they couldn't communicate with the complain. they forget they can communicate with each other. toward the end they started communicating with each other. that really helped. in the primary you could say the super pac was restore the future

super pac played a big role on behalf of governor romney. remember we lost south carolina, to newt gingrich, he, i can't remember ten days or so before we had to go to florida. and not of campaign cash at that point. it was late in the primary reraised and spent lot of money. you can't general election money. you can only spend up to $25 00 per person from the my mare account. the -- super pac outspent us on the air waives in florida by probably ten to one. so you can say that had a big impact in the state of florida for governor romney winning florida. >> right. and a lot of that was also, you know, taking out gingrich. 90 percent of that was negative. >> sure. right. >> yeah. so what was the worst moment for

you? was it in june when you realized that spencer in the month of may had outraised you for the maybe going to the second time in barack obama's whole history in presidential politics? >> yeah. >> were you surprise you got beat? >> it was like a punch in the guilt. we were used to winning the money game. when i was invited here i was excited to meet spencer. it's a shame i like him. we figured out. it's a little bit hardener this time, '08, the online community when they did amazingly well. that's the case we were nervous about every month. what will we do? we care about the number of donors. we have to have more donor. ..

>> we thought we would be massively out spent, and there was a discussion, well, do we take public financing, what are we going to do? >> oh, well. >> there was an element of, oh, gosh, there's never been done before. we'll take them at their word. can we match them? that was a big moment of we could be in trouble, but the

other was when we were raising money in the general election before governor romney was the nominee. just to explain how that works, when you are the primary candidate, we raised and spent a hundred million dollars to win the primary. the obama campaign raised money for the pri marry, and used that to attack governor romney and build a general election strategy. we start with a hundred million dollar definite, basically, and that money is gone, and now we're in april-may. governor romney is the presumed nominee, but the gavel has not gone down at the convention. we raise general election money, but we're not allowed to spend it legally. that was a very -- >> does that mean all future republican conventions will be in jupe so you don't have that -- >> you know, if you can get it done in june or may for that

matter, from a fundraising standpoint, that's fantastic. >> there's an irony that, you know, the party that usually supports campaign finance reform opted out of the rules starting in 2008, and you guys were kind of handcuffed by the rules that ewe -- you also didn't support. you took the handcuffs off. >> uh-huh. >> now, there was a lot of criticism of that. >> huh. >> do you think that the campaign contributed to the sort of system we have where it's just a wash in money? for 30 years, we had limitation in federal election campaigns, and both accepted public financing. fair to say that barack obama blew up the financing system? >> we knew we would have

flexibility with the amount of money raised, and we knew it was a decision we made knowing that would likely be the case. >> you ended up being less worried about citizens united as time went on, and early on, it was a big concern, and then when you saw that super pacs not spending money so well on the other side, it was less of a concern? >> i think it's right had they figureed out earlier they could communicate, one take florida and another something else, and, yeah, that would have made for concern, but it was not getting the traction that we saw, so we were able to still build the low dollar campaign and be competitive. >> is part of it that the money -- this would be for both of you, that the money raise by super pacs really only works on television? it doesn't give you any edge on

the ground at all because if somebody goes to the door and knocks and says i'm here from restore our future, people go, what's that? >> uh-huh, sure. >> it doesn't translate on the ground, and so whatever limitations there are with tv advertising, especially if people time shift more and don't watch television in the way they used to, might ironically mean that these super pacs don't have quite as much influence as we all assumed a couple years ago. >> i think that's -- i wouldn't say just tv advertisement. i think advertising generally, they will be able -- but to think that a super pac can take the place of a field operation from a campaign, i think, is -- you can't -- you can't replace the value of somebody knocking on a door making a phone call and saying i'm calling from the romney for president campaign or the obama for america campaign because you represent the

campaign. you represent the candidate. you're exactly right. what reason to people have? there's no brant built around a super pack. there's no affinity. there's an atm to advertise. >> when did you realize that you were going to get beat p on the ground? was it not until after the election that you understood how good the obama ground game was? >> at least for me, there was never an expectation that we would win the ground game. that was not the obama came pain for years have been able to have an unbelievable ground game. what was frustrating to me, what i didn't know until afterwards is that we didn't have a goodceps of what the obama campaign was doing on the ground. i'm fine getting beaten on the

ground, but i'm not okay with not having good intelligence about what the other side is doing, and that's the part that was frustrating. >> uh-huh. >> in terms of the digital part, did you feel you were beat on that, on the digital side? >> well, the obama campaign and you can speak to it in detail, did a great job of bringing in talent from the digital world. it was not, i suspect, if you look at the digital department of the obama for america campaign, was a lot of people that had no experience in politics, but a lot of experience with the digital world, and we had people who were experienced in the digital world, by because of the association with politics, that's something that, quite frankly, republicans have to look at. if the republican party does not completely re-examine the

ability to build a digital team, and when i say "digital team," go to silicon valley and build a recruiting mission, what can we do to get digital leaders involved in the republican party? we'll never catch up. you -- it's not going to be built by people that are involved in politics with a side hobby of technology. it has to be people with an expertise in technology. >> now it's the geek gap because for whatever reason, you guys were not able to attract the code writers and the other people most of whom are under 30 who understand social networking, understand analytics, and so when there was a proposal to do something in a bigger way, like more like chicago, in boston, a person making the proposal said we

can't do this in boston because there's not enough republican geeks to get it done. we'd have to have the operation in salt lake city. that was the original alex gauge, you know, proposal. >> yeah. >> so how do you go about closing the geek gap? what can you do? >> well, i think this is a party issue going forward. i mean, the party, and i know they are doing this, that's something they're taking a hard look at. way can we actually do to close that gap? there are some things that are happening right now. you know, i don't represent the party so i can't speak to those specific things that the party is doing, but i know everyone's well aware of it, and very focused on it. you -- pointing out that there is a gap, i don't think is news to anyone in the republican party, but what will they do about it? >> yeah. on the democratic side, is it really true that people with no

experience in politics who came from the tech world in chicago made the major contribution, or was it more that the people who had some experience in politics and some digital experience were the ones that you got the better performance out of? >> well, i think it was a combination. i mean, we had a lot of wonderful folks that we recruited from, you know, the tech world. their first love was technology, and then they decided to come over to politics. a lot of the folks that came over didn't know what gotv was or utw, it was interesting. you know, as any campaign, i'm sure you felt as though you figure out how to work as a team. the tech folk, i couldn't understand them talking to me, but they worked together, figured it out, and were successful. it was stressful there because a lot didn't come from the same backgrounds, but we ultimately -- >> i know this is not your area,

but could you talk a little bit about the facebook targeted sharing program and how that worked. probably teddy. they were always working on that, and -- >> but facebook was a big deal. >> right, right. right. it was a human deal. you know that's how we communicated with a lot of folks m i don't know all the details about it. >> do you think in the future, and we'll open it up for questions, how is this going to change in 2016? will, let's start on the republican side, will you -- you talk about building a, you know, a different kind of model that uses the web more, does the republican party have to go through a full transition on this, or do you think four years from now it'll still be mostly

high net worth individuals who are -- >> well, i think pretending, whether it's the republicans or the democrats, pretending that whoever runs in 2016, the best technology is not going to create a cause for the candidate. that's the thing people have to remember is that the cause is built by the message. the technology enables that and gets people involved, but that really doesn't happen until much later in the campaign, so if two individuals decide to run for president in the primary on the democratic side, they have to build a high dollar net worth: if they think they can go out and have this digital, go from a campaign to a cause and match the numbers talked about, $66 per contribution, they are nuts. that's not going to happen. that doesn't happen until much later in the process. >> it's like a startup. you need the capital in the

beginning. >> absolutely. the same was true in 2007; right? >> right. >> how do you think hillary clinton or whoever is the, you know, the democratic candidate four years from now, what's the next generation on the democratic side? >> there's a lot more tools, even then were available now, you have the major dollar component. there's still people who want to give money to the candidate, so, you know, folks that can write $30,000 checks will not go online to give. some do, but they'd rather go to a dinner to see the nominee or candidate, but it's smart to start microtargetting and how they want to be communicated with. still like to write a check, direct mail, we have no know that and early on. if he wants to come to a dollar fundraiser or a big george clooney fan, and he's a

surrogate, you have to know that information early on of the that's the stuff you can know and know what mode of communication -- >> so you would know who the george clooney fanses were? >> you could get to that with all the analysis. we didn't know that then. i went, it was great. nothing wrong with that guy. >> they had a section called "the cave," over at the prudential building, and could the cave figure out who liked what intertapement and who would be interested in a wind tour invitation? >> it was getting closer to that the longer they worked on things. it was more when we started on how folks wanted to be communicated with and asked for money of the that's helpful. >> okay. i think we're at the part of the program where we can take some questions. yes?

>> first in the case, is there potential conflicts of interest when both the campaign and super packs try to pass into the same donor base, especially in the case of big money donors, and secondly, when it goes shifting from after the election, recently, the "new york times" reported that organizing fraction is having this half a million dollar mark for direct ag seases with the president, and mr. jay carney addressed this in a couple press briefings, but would any of you like to comment on that, or not on the specific case, but from a hypothetical or general sense, after the election, for an elected official, how is the former campaign money machine being operated in terms of access or policymaking? >> that's for you. there's a stinging editorial in the "new york times" about that. >> yeahing i know. we're still in the process of

putting the c-4 together. it's in development. we are still working on that. we're still working on it. that's not really -- >> the president used to say he didn't believe in c4's and that, you know, if you were going to raise this money, it should at least be disclosed, so why -- >> not taking money from lobbyists or pacs, disclose some of it. >> how do you know whether you take money from lobbyists or pacs? >> we'll figure it out. >> just to sort of decode this a little bit, a c4, so where's the transparency in that? >> you don't have to put on the website who the donors are, and we did that too. like i said, we're in the phases

of figuring all of that out. i know this is a lame answer, but that's what we're doing. >> so, and on the super pac question for you, well, in terms of kind of competition for donors, there's a limit what somebody gives to the campaign, so what we would always tell donors, that they should max out their entire contribution to the romney campaign and the party before engaging in any of the discussion with a super pacment now, i'm sure that there are plenty of people that donated to the super pac that didn't end up giving to the campaign, but i would imagine that's a small slice of pizza. imagine if somebody gave a hundred thousand dollars to a super pac to support governor romney, chances are there's a big supporter and believe in the campaign, and, therefore, also contribute to the campaign. super pac were created for people to diff above and beyond the campaign finance laws.

>> now, we know kind of what the democrats think about this, but after the 2012 election, how comfortable are you with the fact that both your presidential candidate and vice presidential went to kiss the ring of sheldon, came out the other day that his company, the sands corporation, his casino, admitted in filings with the securities and exchange commission that they violated the foreign corrupt practices act to engage in bribery overseas. you know, aren't there some real problems for society when you have billionaires who can essentially give unlimited amounts of money who gave over a hundred million dollars to a super pac. isn't that troubling for you at all? >> well, i think you have to separate it. somebody who is a donor has, you know, admits something to the security exchange commission or

has any other violation, it's up fair to say, well, the campaign shouldn't associate with that individual when we have, you know, we're not told that information ahead of time. we do a good job of vetting contributions, every bundlers, every time we go to a home can do a fundraiser, do a research to know if there's anything there that could possibly embarrass the campaign, but, you know, with thousands of people serving as bundlers and donors, you know, you're going to end uptaking a contribution from someone who you may ultimately have to refund. >> well, i guess the larger question i'm trying to get at a little here is whether there's any -- the republican party's going through a lot of kind of reassessment now. even though you had good standards for who could give, and you vetted them carefully,

nonetheless, you had, you know, four or five billionaires who were giving just unthinkable amounts of money, a hundred million dollars is a lot of money. >> so did the democrats. >> they don't have anybody who is in -- do they? well, maybe i'm wrong. >> we don't have anybody at that level. >> anybody give more than $10 million? >> george soros gave -- >> in four, yeah. >> to say george doesn't count because he gave 75 and sheldon gave a hundred, that's unfair. >> right, not this time, but in 2004, george gave a huge amount of money. so, but, you know, i'm trying to get to, since we're at the university of chicago, the mori cosmic issues here, about whether this is good for democracy or not. >> well -- >> on either side. >> well, the law is the law. right now, with the citizens

united, the law says an individual can write an up limited check to a super pac organization, so if it requires, republicans and democrats saying what should the law be of the it relates to campaign finance. give an up limited amount with complete disclosure? should there be campaign limits and no super pacs? that's a discussion that both sides have to have because you can't -- just saying, well, the republicans are the party of big money where we're going to get people writing million dollar checks is unfair. that happens on both sides of the aisle k and there's plenty of data to show that. i would certainly be open for discussion with both parties saying what's working going forward, and i would be in favor of complete disclosure. it happens with the union as realm. the idea that the democratic

party raises hundreds of millions of dollars from unions with little to no disclosure is no different than somebody writing a large check. >> okay. does anybody else -- yes, back there. >> hi. i'm greg, and i'm long-term goal is to work if the g.o.p. in the next presidential race as 20 # 16 as a political communications team, and i have a question given my experience. i started in college yat debate learning how to frame issues stray teemingically with an audience, and then i went to the british parliament to do a communications project with the labour party. coming back from there, eninternedded for the romney campaign with dan rutherford, and a recent intern in london. now i'm lost on what steps you take next in order to be involved in the presidential

race that's four years from nowment gimp your extensive period in politics and similar ambitions, what do you advise me of the next steps? >> people want to know that, how do you get into the game. >> well, i mean, what i would do is try to get in a campaign for 2014, you know? that's the great thing about campaigns. i've been doing it for a long time. i'm old, but the great thing about it is you can start -- i started out fund raising when i was 22, and you get a promotion. if you are good at it, promote every two years if you stick to it. get involved with a campaign this cycle. you know, do something for 2013, and then do a senate race, maybe, in 2014, and then you would be something that i think any of the republican candidates would want to pick up for 2016 because of the experience you would have gained in the past few years. >> i agree with that. i think picking a candidate and

one early is the advice i would give you. a lot of folks say, well, i don't want to pick the wrong person. i want to be sure i'm with the winning ticket. regardless of -- pick someone who you believe will be the best person for the job, and the great thing about campaigns is there's young people given responsibility well beyond their years, and if you do a good job for the candidate, you will take on more and more responsibility, but don't wait around to try to figure out who the actual nominee is going to be. pick someone early, and at the end of the day, if they don't win, you will be the top of the list, and i look at people that we hired at the romney campaign in the general election, we hired a lot of people who worked on other campaigns in the primariment don't worry about whether or not that perp's ultimately the nominee. pick a candidate who you believe in, and go to work for them. >> i would agree with that. when i -- i was in dc in 2006

helping with the democratic senate campaign committee to win back the majority, and then senator obama said, well, hey, if i do this, you'll go with me; right? i was like, sure. that right there, i decided to go with obama over clinton, career suicide, before i even asked any of the questions. well, whafers the biggest fundraiser, i got a lady out in san diego who raised me $35,000. i'm like, great. great. i'm going up against the clinton machine. he had a data base with 20,000 names in it, not e-mail addresses, just addresses, maybe from direct mail or whatever, but i really believed he was going to be the best democratic nominee and hopefully president, and i did that, and since, it's been a fun ride, so i agree with you, definitely. >> my own experience was that, i mean, i had not had any experience on a political campaign, but to sort of reenforce that point, i joined governor romney working were him at the olympics in salt lake

city. he said i'm going to run for governor of massachusetts. come out and work on my campaign. i had no interest in politics at that point. i said, no, i'm not interested, i got a job in new york. i went home, told my wife, she said, tell him we're moving to boston. we moved to boston, and three years later, he asked me to be the national finance director for the campaign. when i moved to boston, i had no idea what the fund raising was, but pick someone you believe in, and you'll do a good job for them. >> how old were you at that point? >> 20 -- finance director? >> well, that too, but when you started with him, when you first went to boston and took up -- >> 23. >> then you were finance director at what age? >> like -- i guess i was 26 -- i was 22 when i first left work. >> wow, that's pretty amazing. yes?

>> i'd like to come back to a question that was coveredded, but i think it maybe could be covered even more, and that's of issue of the funding from smaller donors that really can't start until the nominee is a presumed nominee, and, yet, that funding is much more effective in terms of advertising, what it buys, and in terms of grassroots and so on. both parties will be in that situation in 2016 with the primaries. so how would, you know, knowing what you know about how it works, what can the candidates do, or how can the party, you know, somehow get things going before people really are willing to step up because even if the -- even if the conventions are in july or i can't quite imagine may, but, you know, earlier, there's going to be this big problem after that where small donations are going to be particularly important, and, you know, you faced this

right after the republican convention. >> uh-huh. >> from all i know, you were the advertising that had to go quite quiet there for a period, kind of a critical period in the democratic convention and soon after that, so any thoughts that either of you have about how that could be handled? >> can we first just straighten out a couple of factual things there? you were not under any limitations at the democratic convention. it was after the republican convention. you could have advertised as much as you wanted any time after the republican convention. it's just your plan was to do more of it in late september and october. >> right. that's right. >> the only -- the limitations that the law provides around high donors, not small donors. if you have a small donor base, correct me if i'm wrong, the limitations don't apply. it's for the people who have sort of maxed out in the primaries that their dollars can't be used until the general

election. >> right. >> haven't built up that small base yet, you don't have anybody to go to. >> right. well, the irony is that the republican party used to have a bigger small donor base in the 90s, but i think what you need is time to build that up as the presumed nominee, and i don't want to put all the blame on the party, but having 20 debates and having ten candidates on the stage, every day you go on prevents someone from emerging as the leader of the party, talking about the republican party here, and people are waiting to get involved. once people knew governor romney was the presumed nominee, that's when the low dollar checks came in, but as long as there's 20 debates in the primary process, the republican party gets to

examine the primary process. >> we'll run into that too for 2016. it'll be the same thing. that happens with the 2008 race for us as well. we were building up, but senator obama was a different candidate than a lot of your typical candidates. >> you don't think there's any chance in the next four years to get any kind of a new rules that maybe empower donors more or somehow change the rules in ways that benefit the democracy? >> that'd be great. >> you know, there's localities that have matching programs now, and including in republican areas like arizona that are popular at the local level. is that something that we can

hope for? >> it would be great, but i don't see that happening now between the next race. >> yes. >> thank you both for coming. ms. smoot, i have a question about the smallest campaign you were a part of. do you remember what it is? >> probably my own running for student class president. my freshman year at smith college, i was -- i didn't win. [laughter] >> okay. >> i didn't have to raise money for that either. >> okay, then i guess the first campaign on which you were raising money for a statewide office or representative of the house, what's the difference between, you know, beyond just scale? what's the differences between those types of races? >> when i first started

fundraising, the internet had not been invented yet. it was all phone calls. i worked for lieutenant governor mark single from pennsylvania. anybody here from pennsylvania? worked for his race, and the mayor of dc, and, basically -- >> was not mary and barry, was it? >> no, no. you know, you sat on the phone, and would make phone calls for eight hours a day, but that's now you did it back in the day, and you printed invitations and did stuffing parties at night and mailed out invitations. it was crazy. i sound old, don't i? >> what do you think it is that makes you want to do something that most people hate doing? raising money. >> i think it's fun. it's black and white. you know, okay, if there's an event tonight, you say, oh, it's snowing. people won't come. we didn't make the goal because of 245. you make excuses, but with the dollar figure, it's black and white.

the goal is 10,000, you raised 8500, you didn't reach the goal. it's a game, a puzzle making those goals. >> i agree. i think that a lot of -- on a political campaign, everyonements to be and thinks they are a strategist. every donor believes they have the idea that wins the race. when they come off the ideas, great, here's the goal. start making calls. the great thing about fund raising is you can measure it. you had a saying, a thing on the wall that said if you can't measure it, you can't manage it. we like to measure everything in the finance shop. it's harder to measure things when there's an election day so far out. every month we were able to measure fund raising. how are we doing against the obama campaign? we measure. we had daily metrics just to get

on the call every morning with every one the state directers to report in how much money they actually had in hand that day. i loved that because you can measure it. you are adding real value to the campaign along the way. if you want to get involved in a political campaign, and now i sound like it's a commercial to be a fundraiser, but go show the campaign that you're willing to help raise money, and you will be welcomed with opened arms in any political campaign. >> i fully agree with that. >> anybody here want to do that? >> do you want to do fund raising? good. >> that's at way he got started. >> phenomenal. >> anybody else have a -- how old are you now? >> 33. >> okay. >> don't ask me. >> i won't ask. >> i'm retired from politics. [laughter] >> until you run; right? >> no. >> there might be a race here, who knows.

>> no, no, no. there's not a race here. that's said on camera. [laughter] >> it is interesting that it is a way in that people often don't think about because most people don't want to do it, so for those who are trying to get involved in politics, you know, if you have a talent for it or the stomach for it, you get into the game. speaking at cpac, what's the role of the republican party will be going forward? >> well, let me first say that working for governor romney while the outcome was not what i and others hoped it would be, it was an honor and prief leming to work for that man, and he is a man of decency. he's a man of integrity. that's what attracted me to governor romney and his family.

i would not have dedicated the amount of time and years that i did because, again, this is not what i do. raising money for political campaign is not what i thought i would be doing. i did this because i believed in mitt romney, the man, and the perp that i thought would be a great president. when you lose a campaign, particularly for president, it's -- there are not a lot of case studies. you can't look and say, well, what is someone that is not currently an office holder, that has already built a very successful career, and then loses the presidency go and do next in social? it's not go back to the senate or be a governor. there's studies of there. it's a very -- it requires a lot of self-reflection, which i think he's doing. how he can have an impact.

he's not going to go away. he's not going to run for office again, but we spent close to a billion dollars building a cause r and almost half the country supported his candidacy. there's got to be something there that can be used whether it's talking about a variety of issues, whether it is creating a foundation of some type. i think it's a fair prediction to say you have not seen the end of mitt romney. i know for some, you wish you had. >> take us back to election night a little bit. it's not dramatic on the democratic side. their models said they were going to win. you all were surprised that you lost. >> see the rest of this at c-span.org. live now to hear from former treasury secretary hank paulson speaking about u.s.-china economic and environmental challenges here at george washington university. it's just getting underway. >> this year the global forum

will be held in china. it brings together chief exec ties and global thought leaders to discuss intergnarl commerce and other global issues. this year, i'm delighted to announce george washington university is the first, and so far, the first educational partner for the global forum that will provide access to our students and faculty, alumni and important content developed there, and also fortune has access to our faculty expertise. it's a pleasure to introduce today's speakers for the previewed event. henry, better known as hank, was sworn in at the 74th secretary of the united states department of the treasury on july 10th, 2006. as secretary, he was the president's leading policy adviser on a broad range of domestic and international issues. 2011, he founded the pallson

institute in chicago committed to promoting economic sustainable growth and a cleaner environment. before he entered public service, he held leadership positions in goldman sachs, including chief executive officer. he's lone add -- long advocating a stronger building relationship between u.s. and china. he established the firms china present and promoting collaboration between the world's two largest economies has been a core focus of the institute. he's written numerous articles on u.s.-china relations, served as co-chairman of the nature cop ser van sighs asian -- conservancy asian-pacific council, and andy was managing editor of "fortune" in october 2006. his responsibilities include overseeing "fortune" magazine and fortune.com with 11 million rairds as well as digital media

and the global forum. under his tenure, fortune was added to hot week and a-list in 2012. in 2010, " fortune" won writer's award for best in business general excellence and received a lobe award and new york press club award for the 2009 reporting on bernie madoff. he joined in 1985 as an intern from columbia gurnet -- journalism school and reported on wall street, information technology, and entertainment, a regular guest on msnbc's "morning joe," and "squawk box," and from 2001-2006, he was the business anchor for cnn's, american morning. please help me welcome hank and

mr. andy. [applause] >> thank you, thank you very much, president knapp, and thank you to everyone here at george washington university. thank you to all the students and everyone else who came here today. we're delighted to see you all. also, thank you, secretary, for coming, and having this conversation with us. let's get right to it, and the conversation today, of course, is about china and the united states' relationship with china, and as president knapp suggested, hank is uniquely qualified to discuss this given his role with the goldman sachs and non-profit world, and each one of the roles is salient in a unique way to what's going on in

china and the relationship, the u.s.-china relationship, so i think you'll see that. let's get right to maybe the most important topic with regard to china right now, mr. secretary, which is the changeover in leadership. i know that you've said the good news is that the president is a strong leader. the bad news is that he has to be one. i wonder if you could explain exactly what you mean by that. >> yes, andy, and let me also say it's good to be back in washington, if only for a day, and, particularly, good to be here with all of you. andy, you stole my line there, you know, that you know, he's a strong leader, and they have a strong leadership team, and they can talk a little about that, but there's -- i think they've got some real challenges, and

that this leadership team is going to be tested by challenges domestically and internationally over the next ten years. you know, managing that economy on the scale that they have to manage it, and given the pace of change is just unprecedented. there are -- their current economic model, i think, is running out of steam, so i think they need to reinvent that. he has -- some other major challenges. you know, he's got the, you know, he really needs to make some big changes in governance, institute the rule of law, which is very necessary for continued business and, you know, economic and political success. there's the environment, a big area of concern, and protest,

and so needing to address the dirty air and water. corruption, again, infuriating a lot of chinese, particularly over issues like property rights and so on. this leader is particularly strong, the standing committee, the standing committee is seven rather than five. it's going to be much easier to reach consensus. the president and the premier are the only two members that are not term limited. they will be there presumably for ten years. the other five are really got at getting things done, and expectations are very high in

the country. you would have to sort of look back and just remember high expectations were here after president obama was elected, that there are highs because there's a general perception, which i agree with, which reforms had stalled for at least five years, and there's a lot to be done. there are highs because his leadership style is very appealing, very different. he speaks extemporaneously. he's said that when people meet with him, you know, bureaucrats aren't to come in and just read talking points, that he is -- he is really spoken out against some of the abuses of power, and some of the perks, you know. he wants there to be -- to do away with so many of the

motorcades that disrupt traffic. you're not to have sumptuous entertaining. when i had lunch at the embassy here a couple months ago to say good-bye to ambassador cho enrings g, i came away hungry. instead of a standard nine course lunch, there were four courses and a soup. he said there's no more hard liquor served in the military entertainments, and the liquor company stocked dropped 10% the next day. you know, there's not as many people in the vine waiting rooms, so there's done things symbolically, and, you know, he understands the role the private sector's got to play. i think expectations are high, but there's a lot that needs to be done. it's a difficult challenge running an economy of what's

happened. never in the history of the world was any country that size had so much change so quickly. the expectations of the chinese people continue to grow, and so to continue to manage that change and to put in place reforms on the scale in which he's going to have to do it, in the face of vested interests, people are going to be fighting for the status quo. they have the work cut out of for them. >> you have the economy switching from a production economy to a cop consumption economy. the environmental factors, the political factors, vis-a-vis some of the neighbors. you have not touched upon, but i want to talk about corruption. when i talk to people in china, they indicate that could be problem number one, and the feeling amongst some people in china, many people in china, perhaps, is that to get ahead in china, you don't play by the rules, and the feeling that that

is something that changed different from ten years ago, and this this is something that the president needs to address and is keen on addressing. do you think that's correct? >> yeah, let's step back a little bit, and talk about rules and because the reason i started off when i talkedded about the challenge, i talked about instituting the rule of law. >> uh-huh. >> and as you look at the history of china's economic reform, they've moved very, v. -- very, very quickly, and so to move that quickly, they use pilot programs. they encouraged innovation and various activityings which -- affidavits really ahead of the rules they had in place, and it's been a country -- it's a country ruled by men as opposed to law.

that's probably over simplification, but i think the reason that i and so many others went as frequently as we did to china were relationships were very, very important, but the country is now at a size, and a scale where for them to be successful, they are going to need to engage in institution building, whether it's -- and to be able to implement, to be able to not only have laws in beijing and rules, but to be able to implement and enforce those rules across a wide range of areas, you know, from the environment to various, you know, securities laws, and so on, and so i think a lot of this has to do with -- with not just rules and constitutions, but has to do with good governance and

transparency, and i really believe the only way for this to work is both the leaders and citizens have to be invested in a rules based -- in a rules based system, so now you -- you come to corruption because that this is -- this is a serious problem, and it is infiduciary rating people, and the biggest source, you know, of anger, you know, a number of sources, but one of the biggest sources has to do with property rights, and municipal officials taking, you know, selling land, which is one of the big financing vehicles for urbanization, but going after that corruption, they've -- the head of the disblip -- disciplinary committee and standing committee who we know

well here, he was my counterpart with the sed, he's been one of the top economic reformers in china, he knows how to get things done. >> that was the strategic economic dialogue. >> excuse me, that was the strategic economic dialogue. he's a doer. this is not an easy challenge because you have to go after, i'm sure, working at it systemly, and they had well publicized examples, you know, in terms of government officials and good business people, and so this is a significant problem, and there's a significant problem to be taken on. it's not just in china. they say in much of the developing world this is a --

this is a significant -- >> mag any fieded by the rate of growth. >> magnifies because china is so large. don't think there's more corruption in china an india, for instance, or it just -- or many other places in the world but because china is a big end gin and the world economy, and is so much change there that it's a human issue. >> i do have questions from all of you or some of you that you committed, and we'll get to them, but there's other things to touch on first. stainability i mentioned you are keen on of the it's something that's really the focus of the pallson initiative and paulson institute, having a sustainable, economic growth plan, a model

perhaps, or advising china in the united states how to implement the growth, and we hear about the problems in china, mr. secretary, and i'm, frankly, a little bit surprised that they have not been addressed quicker, and, informs, the problems seem to be getting worse over couple years and accelerating over the past couple months. of course, the pollution in beijing, the dead pigs in the river in shanghai, and the stories in the paper this week about the problems. what will it take for china to address it? it seems at some point the cost of not doing anything exceeds the cost of sitting still or changing it as you said.

>> the paulson institute is a think and do tank, nonfor profit, focused on u.s. and china because we're the two biggest economy in the world, biggest consumers of energy, biggest emitters of carbon, and so a lot of it is focused around having economic growth and having it be sustainable, everything from investment in the u.s. encouraging investment in the u.s. that leads to more jobs in the u.s. to leadership practices, best practices in business for the leaders of the state owned enterprises and other big companies in china that seek to become leading global companies, and then a big part is on the focus of steanble urbanization because that will be, in my judgment, the biggest

economic event in the first part of the century with another 300 million chinese to go to the cities, and that's going to be a driver of economic and environmental outcomes, and you're right, we need a new model of growth, and let's talk, get to your question specifically about the environment. because as i explain it to people, the chinese have been done some extraordinary things in terms of the amount of investment that they made in alternative sources of energy, clean technology, the largest user of wind. they are going to be a huge user of solar. they've invested. they've got a big percentage of a manufacturing capacity of solar in the world. they've shut down many more dirty power plants than we have, but this is -- they've been

winning some battles, but losing maybe the overall war because the good things they've done have been overwhelmed by the pace of their growth. i think they now recognize the public is demanding it, and, also, you know, growth -- stainability, i think, is, to me people, just been a buzz word, and i think people are beginning to really understand that the growth model is not sustainable. i mean, what's another point of gdp worth if people are dying from dirty water, dirty air. there's all kinds of estimates about what the drag is op economic growth from the dirty environment, some people believe several percentage points, but it's clearly not sustainable,

and i think that all of us in the world need to really rethink some things. you know, economic growth and environmental protection are not at odds. they are opposite sides of the same coin if you're looking at it from the longer term view, and you're looking at longer term prosperity, and i think the chinese and all of us need a new economic frame work that basically says we need a model of economic growth that lets us increase our standard of living while recognizing that the scarcity of resources, natural resources, are not undermining the ecosystem in the environment we need for our water, for our food, for the air we breathe, for energy, and i think we're

close to the tipping point globally in the issues, and, of course, the chinese are focused on this big time and need a new model of urbanization. i believe they will achieve one. that's why i spend the amount of time i spend there. >> do you have the feeling the alarm bells have gone off recently? >> yes. i think, first of all, that the -- they are focused on this for some time and understand it. what you see with the dirty air has got attention, and, of course, the air in beijing is dirty, largely because we think there's a cold winter, and we got these migrant workers who don't have the same economic

benefits that others have in china. there's something in the neighborhood of 300 million migrants from the farms that come to the cities, and they don't have the same economic benefits. they don't 1 the same education benefits, and to keep themselves warm, they burn dirty coal or coal, which is the cheapest coal they can find to stay warm, and, you know, if you look more broadly, you know, for -- i, you know, i spent a lot of time with people that are my contemporaries, and some of whom discount climate change, and, you know, when you're -- when you're looking at 50 degrees below in russia, you know, snowing and istanbul, burning tires to stay warm, and, you know, the cold in beijing, i think that there's, you know,

that this is a serious global probable, and i don't think we can solve this in the u.s. alone. the only way you're going to solve is it developing new, clean technologies to be rolled out on a cost figure basis on scale to the developing world, particularly china. >> my grant workers coal burner, not just cars and power plants? >> oh, yeah -- >> not to belabor this. >> i just say this to say what -- because i'll get to it, what are the things china needs to do in terms of the economic model for reform? you started off by saying, which is true, they need to move to more domestic growth, and bigger services sector, less reliance on exports, and heavy government investment and infrastructure and resource intensive exports, but they also need a normalize the labor market, which is a

tricky thing to do because they -- but if they do it, and if they take the restrictions off, you know, my grant -- the migrant workers, as they go to the city, and if that's done properly, there's going to be a consumption dividend, so they got to do that. that's probably the second thing i say they need to do. the third thing i point out, which we've talked about, is to deal with these environmental issues that are so tough. they also need to continue the reform at the state own enterprises, and they need to, you know, reform the financial markets, which we've talked about, and then this urbanization. they need a new model for urbanization bonnization. they have to comet to be able to -- this process on